Financial Statements — For the year ending March 31, 2017
Table of Contents
- Statement of Management Responsibility Including Internal Control over Financial Reporting
- Notes to the Financial Statements (Unaudited)
- 1. Authority and objectives
- 2. Summary of significant accounting policies
- 3. Parliamentary authorities
- 4. Accounts payable and accrued liabilities
- 5. Employee future benefits
- 6. Accounts receivable and advances
- 7. Tangible capital assets
- 8. Contractual obligations
- 9. Contingent liabilities
- 10. Related party transactions
- 11. Segmented information
- 12. Comparative information
- Annex to the Statement of Management Responsibility Including Internal Control over Financial Reporting for 2016-17 (Unaudited)
Statement of Management Responsibility Including Internal Control over Financial Reporting
Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2017, and all information contained in these statements rests with the management of the Public Service Commission of Canada (PSC). These financial statements have been prepared by management using the Government's accounting policies, which are based on Canadian public sector accounting standards.
Management is responsible for the integrity and objectivity of the information in these financial statements. Some of the information in the financial statements is based on management's best estimates and judgment, and gives due consideration to materiality. To fulfill its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of the PSC's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in the PSC's Departmental Results Report, is consistent with these financial statements.
Management is also responsible for maintaining an effective system of internal control over financial reporting (ICFR) designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are properly authorized and recorded in accordance with the Financial Administration Act and other applicable legislation, regulations, authorities and policies.
Management seeks to ensure the objectivity and integrity of data in its financial statements through careful selection, training and development of qualified staff; through organizational arrangements that provide appropriate divisions of responsibility; through communication programs aimed at ensuring that regulations, policies, standards, and managerial authorities are understood throughout the PSC and through conducting an annual risk-based assessment of the effectiveness of the system of ICFR.
The system of ICFR is designed to mitigate risks to a reasonable level based on an ongoing process to identify key risks, to assess effectiveness of associated key controls, and to make any necessary adjustments.
A risk-based assessment of the system of ICFR for the year ended March 31, 2017 was completed in accordance with the Treasury Board Policy on Internal Control and the results and action plans are summarized in the annex.
The effectiveness and adequacy of the PSC's system of internal control is reviewed by the work of internal audit staff, who conduct periodic audits of different areas of the PSC's operations, and by the Internal Audit Committee, which provides advice to the President of the PSC on the adequacy and functioning of the department’s risk management, control and governance frameworks and processes including internal control over financial reporting.
The financial statements of the PSC have not been audited.
Patrick Borbey,
President
Phil Morton, CPA, CGA
Chief Financial Officer
Gatineau, Canada
August 21, 2017
2017 | 2016 | |
---|---|---|
Liabilities | ||
Accounts payable and accrued liabilities (Note 4) | 9,146 | 7,438 |
Vacation pay and compensatory leave | 2,883 | 2,795 |
Lease obligation for tangible capital assets | - |
23 |
Employee future benefits (Note 5) | 3,132 | 5,075 |
Total liabilities | 15,161 | 15,331 |
Financial assets | ||
Due from the Consolidated Revenue Fund | 4,698 | 6,824 |
Accounts receivable and advances (Note 6) | 8,308 | 3,241 |
Total financial assets | 13,006 | 10,065 |
Departmental net debt | 2,155 | 5,266 |
Non-financial assets | ||
Prepaid expenses | - |
450 |
Tangible capital assets (Note 7) | 2,206 | 2,267 |
Total non-financial assets | 2,206 | 2,717 |
Departamental net financial position |
51 | (2,549) |
Contractual obligation (Note 8) | ||
Contingent liabilities (Note 9) | ||
The accompanying notes form an integral part of these financial statements. |
Patrick Borbey
President
Phil Morton, CPA, CGA
Chief Financial Officer
Gatineau, Canada
August 21, 2017
2017 Planned Results | 2017 | 2016 | |
---|---|---|---|
Expenses | |||
Staffing Services and Assessment | 48,664 | 39,135 | 37,892 |
Internal Services | 33,431 | 35,109 | 30,682 |
Oversight of Integrity in Staffing and of Non-Partisanship | 20,287 | 16,427 | 18,858 |
Staffing System Integrity and Political Impartiality | 18,030 | 11,808 | 15,887 |
Total Expenses | 120,412 | 102,479 | 103,319 |
Revenues | |||
Assessment and counselling services revenues | 14,252 | 8,375 | 8,634 |
Miscellaneous revenues | 1,563 | 1,227 | 1,267 |
Revenues earned on behalf of Government | - |
(1,221) | (1,255) |
Total Revenues | 15,815 | 8,381 | 8,646 |
Net cost of operations before government funding and transfers | 104,597 | 94,098 | 94,673 |
Government funding and transfers | |||
Net cash provided by Government | 77,011 | 72,765 | |
Change in due from Consolidated Revenue Fund | (2,126) | 360 | |
Services provided without charge by other government departments (Note 10) | 21,813 | 21,018 | |
Transfer of the transition payments for implementing salary payments in arrears | - | (26) | |
Net cost of operations after government funding and transfers | (2,600) | 556 | |
Departmental net financial position - Beginning of year | (2,549) | (1,993) | |
Departmental net financial position - End of year | 51 | (2,549) | |
Segmented information (Note 11) | |||
The accompanying notes form an integral part of these financial statements |
2017 | 2016 | |
---|---|---|
Net cost of operations after government funding and transfers | (2,600) | 556 |
Change due to tangible capital assets | ||
Acquisition of tangible capital assets | 531 |
29 |
Amortization of tangible capital assets | (576) | (686) |
Net (loss) or gain on disposal of tangible capital assets including adjustments | (16) | (96) |
Total change due to tangible capital assets | (61) | (753) |
Change due to prepaid expenses | (450) | (1,021) |
Net increase (decrease) in departmental net debt | (3,111) | (1,218) |
Departmental net debt - Beginning of year | 5,266 | 6,484 |
Departmental net debt - End of year | 2,155 | 5,266 |
The accompanying notes form an integral part of these financial statements. |
2017 | 2016 | ||
---|---|---|---|
Operating activities | |||
Net cost of operations before government funding and transfers | $94,098 | $94,673 | |
Non-cash Items | Amortization of tangible capital assets | (576) | (686) |
Net (loss) or gain on disposal of tangible capital assets including adjustments | (16) | (96) | |
Services provided without charge by Other Government Departments (Note 10) | (21,813) | (21,018) | |
Transition payments for implementing salary payments in arrears | - |
26 | |
Variations in Statement of Financial Position | Increase (decrease) in accounts receivable and advances | 5,067 |
128 |
Increase (decrease) in prepaid expenses | (450) | (1,021) | |
Decrease (increase) in accounts payable and accrued liabilities | (1,708) |
293 | |
Decrease (increase) in vacation pay and compensatory leave | (88) |
135 | |
Decrease (increase) in employee future benefits | 1,943 | 323 | |
Cash used in operating activities | 76,457 | 72,757 | |
Capital investment activities | |||
Acquisitions of tangible capital assets | 531 |
29 | |
Cash used in capital investment activities | 531 | 29 | |
Financing Activities | |||
Lease payments for tangible capital assets | 23 | (21) | |
Cash used in financing activities | 23 | (21) | |
Net cash provided by Government of Canada | $77,011 | $72,765 | |
The accompanying notes form an integral part of these financial statements. |
Notes to the Financial Statements (Unaudited)
1. Authority and objectives
The Public Service Commission (PSC) is an independent agency established under the Public Service Employment Act (PSEA) and listed in schedules 1.1 and IV of the Financial Administration Act (FAA).
The PSC reports independently to Parliament and is dedicated to building a public service that strives for excellence by protecting merit, non-partisanship, and representativeness of Canadian society and the use of both official languages. This responsibility is performed in the best interests of the public service as part of Canada’s governance system, by administering and applying the provisions of the PSEA and by carrying out responsibilities as provided for in the Employment Equity Act and the Official Languages Act.
The PSC has four programs that contribute to the achievement of its objectives:
The Staffing System Integrity and Political Impartiality program is focused on independently safeguarding merit and non-partisanship in the federal public service. This program includes developing and advancing strategic policy positions and directions, conducting policy research, establishing PSC policies and standards, providing advice, interpretation and guidance, administering delegated and non-delegated authorities, including official languages, the political activities regime and Priority Administration.
The Staffing Services and Assessment program maintains the systems that link Canadians and public servants seeking employment opportunities in the federal public service with hiring departments and agencies. It provides assessment-related products and services in the form of research and development, consultation, assessment operations and counselling for use in recruitment, selection and development throughout the federal public service. This program also includes delivering staffing services, programs and products to departments and agencies, to Canadians and to public servants, through client service units located across Canada.
The Oversight of Integrity in Staffing and of Non-Partisanship program provides an accountability regime for the implementation of the appointment policy and regulatory framework for safeguarding the integrity of public service staffing and ensuring staffing is free from political influence. This program includes monitoring departments’ and agencies’ staffing performance and compliance with legislative requirements; conducting audits and studies; carrying out investigations; and reporting to Parliament on the integrity of public service staffing and the non-partisanship of the public service.
Internal Services are groups of related activities and resources that are administered to support the needs of programs and other corporate obligations of an organization. Internal Services include only those activities and resources that apply across an organization and not to those provided to a specific program.
2. Summary of significant accounting policies
These financial statements have been prepared using the Government's accounting policies stated below, which are based on Canadian public sector accounting standards. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian public sector accounting standards
Significant accounting policies are as follows:
-
Parliamentary authorities
The PSCis financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the PSC do not parallel financial reporting according to generally accepted accounting principles since authorities are primarily based on cash flow requirements. Consequently, items recognized in the Statement of Operations and Departmental Net Financial Position and in the Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 3 provides a reconciliation between the bases of reporting. The planned results amounts in the “Expenses” and “Revenues” sections of the Statement of Operations and Departmental Net Financial Position are the amounts reported in the Future-Oriented Statement of Operations included in the 2016–17 Report on Plans and Priorities
-
Net cash provided by the Government
The PSC operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the PSC is deposited to the CRF and all cash disbursements made by the PSC are paid from the CRF. The net cash provided by Government is the difference between all cash receipts and all cash disbursements including transactions between departments of the Government.
-
Amounts due from the Consolidated Revenue Fund
Amounts due from or to the CRF are the result of timing differences at year-end between when a transaction affects authorities and when it is processed through the CRF. Amounts due from the CRF represent the net amount of cash that the PSC is entitled to draw from the CRF without further authorities to discharge its liabilities.
-
Revenues
Revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenues takes place.
-
Expenses
Expenses are recorded on an accrual basis. Vacation pay and compensatory leave are accrued as the benefits are earned under their respective terms of employment.Services provided without charge by other government departments for accommodation, the employer's contribution to the health and dental insurance plans, legal services, worker's compensation and information technology services are reported as operating expenses at their estimated cost.
-
Employee future benefits
-
Pension benefits
Eligible employees participate in the Public Service Pension Plan, a multiemployer pension plan administered by the Government. The PSC's contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. The PSC's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan's sponsor.
-
Severance benefits
Employees entitled to severance benefits under labour contracts or conditions of employment earn these benefits as services necessary to earn them are rendered. The obligation relating to the benefits earned by employees is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.
-
-
Accounts receivable
Accounts receivable are stated at the lower of cost and net recoverable value. A valuation allowance is recorded for accounts receivable where recovery is considered uncertain.
-
Contingent liabilities
Contingent liabilities are potential liabilities that may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded. If the likelihood is not determinable or if an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.
Tangible capital assets
All tangible capital assets and leasehold improvements having an initial cost of $5,000 or more are recorded at their acquisition cost. Amounts included in assets under development are transferred to the appropriate class of asset upon completion, and are then amortized. Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset as follows:
Asset class Amortization period Office equipment 3 and 10 years Informatics hardware and infrastructure 4 and 5 years Computer software 3 years Furniture and fixtures 15 years Vehicles 6 years Leasehold improvements Lesser of term of lease and useful life of the leasehold improvement Leased equipment Lesser of term of lease and useful life -
Measurement uncertainty
The preparation of these financial statements requires management to make estimates and assumptions that affect amounts of assets, liabilities, revenues and expenses reported in the financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. The most significant items where estimates are used are contingent liabilities, the liability for employee future benefits and the useful life of tangible capital assets. Actual results could significantly differ from those estimated. Management's estimates are reviewed periodically and, as adjustments become necessary, they are recorded in the financial statements in the year they become known.
3. Parliamentary authorities
The PSC receives most of its funding through annual parliamentary authorities. Items recognized in the Statement of Operations and Net Financial Position and the Statement of Financial Position in one year may be funded through parliamentary authorities in prior, current or future years. Accordingly, the PSC has different net results of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables:
2017 | 2016 | |
---|---|---|
Net cost of operations before government funding and transfers | $94,098 | $94,673 |
Adjustments for items affecting net cost of operations but not affecting authorities | ||
Services provided without charge by other government departments | (21,813) | (21,018) |
Amortization of tangible capital assets | (576) | (686) |
Miscellaneous revenues |
5 |
4 |
Proceeds from disposal of crown assets | 1 | 9 |
Decrease (increase) in employee future benefits | 1,943 |
323 |
Decrease (increase) in vacation pay and compensatory leave | (88) | 135 |
Refunds of program expenditures |
865 |
- |
Net (loss) or gain on disposal of tangible capital assets including adjustments |
(16) | (96) |
Accrued liability for contingency | (30) | - |
Other | 302 | 252 |
Total items affecting net cost of operations but not affecting authorities | (19,407) | (21,077) |
Adjustments for items not affecting net cost of operations but affecting authorities | ||
Acquisitions of tangible capital assets | 531 | 29 |
Decrease (increase) in lease obligations for tangible capital assets | 23 | (21) |
Transition payments for implementing salary payments in arrears | - |
26 |
Salary overpayments | 970 | - |
Employee advances |
58 | - |
Increase (decrease) in prepaid expenses |
(450) |
(1,021) |
Total items not affecting net cost of operations but affecting authorities | 1,132 | (987) |
Current year authorities used | 75,823 | 72,609 |
2017 | 2016 | |
---|---|---|
Authorities provided | ||
Vote 1 - Program expenditures (Operating) | 76,695 | 76,198 |
Statutory amounts | 9,109 | 9,607 |
Total authorities provided | 84,804 | 85,805 |
Lapsed: Operating | (8,981) | (13,196) |
Current year authorities used | $75,823 | $72,609 |
4. Accounts payable and accrued liabilities
2017 | 2016 | |
---|---|---|
Accounts payable - Other government departments and agencies | 701 | 367 |
Accounts payable - External parties |
7,852 |
6,811 |
Total accounts payable | 8,553 | 7,178 |
Accrued liabilities | 593 | 260 |
Total accounts payable and accrued liabilities | 9,146 | 7,438 |
5. Employee future benefits
-
Pension benefits
The PSC's employees participate in the Public Service Pension Plan. The Plan is sponsored and administered by the Government of Canada. Pension benefits accrue up to a maximum period of 35 years at a rate of 2 percent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Québec Pension Plans benefits and they are indexed to inflation.
Both the employees and the PSC contribute to the cost of the Plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to Economic Action Plan 2012, employee contributors have been divided into two groups — Group 1 relates to existing plan members as of and Group 2 relates to members joining the Plan as of . Each group has a distinct contribution rate.
The 2016–17 expense amounts to $6,345,611 ($6,616,000 in 2015–16). For Group 1 members, the expense represents approximately 1.12 times (1.25 in 2015–16) the employee contributions and, for Group 2 members, approximately 1.08 times (1.24 in 2015–16) the employee contributions.
The PSC's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the Financial Statements of the Government of Canada, as the Plan's sponsor.
-
Severance benefits
Severance benefits provided to PSC's employees were previously based on an employee’s eligibility, years of service and salary at termination of employment. However, since 2011 the accumulation of severance benefits for voluntary departures progressively ceased for substantially all employees. Employees subject to these changes were given the option to be paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits upon departure from the public service. By March 31, 2017, all settlements for immediate cash out were completed. Severance benefits are unfunded and, consequently, the outstanding obligation will be paid from future authorities.
Information about the severance benefits, measured as at (in thousands of dollars) 2017 2016 Accrued benefit obligation, beginning of year 5,075 5,398 Expense for the year (1,310) negative 389 Benefits paid during the year (633) negative (712) Accrued benefit obligation, end of year 3,132 5,075
6. Accounts receivable and advances
The following table presents details of the PSC's accounts receivable and advances balances:
2017 | 2016 | |
---|---|---|
Receivables - Other government departments & agencies | 6,285 | 3,075 |
Receivables - External parties | 1,965 | 166 |
Employee advances |
58 | - |
Accounts receivable | 8,308 | 3,241 |
7. Tangible capital assets
Capital asset class |
Cost | Accumulated amortization | 2017 | 2016 | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Acquisitions | Adjustment | Disposals, write-offs | Opening balance | Amortization | Adjustments |
Disposals, write-offs | Closing balance | Net book value | Net book value | |||
Office equipment | 137 | 6 | - | (9) | 134 | 99 | 21 | - | (9) | 111 | 23 | 38 |
Informatics hardware and infrastructure | 16 |
- | - | - | 16 | 14 | 2 | - | - | 16 | - | 2 |
Computer software | 33,388 | - | - | (985) | 32,403 | 31,352 | 508 | - | (985) | 30,875 | 1,528 | 2,036 |
Furniture and fixtures | 133 |
- | - |
(105) | 28 | 100 | 10 | - | (101) | 9 | 19 | 33 |
Vehicles | 24 |
- | - | - | 24 |
3 | 3 | - | - | 6 | 18 | 21 |
Leasehold improvement | 261 |
- | - | (10) | 251 | 195 | 24 | - | (11) | 208 | 43 | 66 |
Leased equipment | 34 |
- | - | (34) | - |
13 | 8 | - | (21) | - | - |
21 |
Assets under construction | 50 |
525 |
- | - | 575 | - | - | - | - | - | 575 | 50 |
Total | 34,043 |
531 |
- | (1,143) | 33,431 | 31,776 | 576 | - | (1,127) |
31,225 | 2,206 | 2,267 |
8. Contractual obligations
The nature of the PSC's activities can result in some large multi-year obligations whereby the PSC will be obligated to make future payments when the services are received. Significant contractual obligations that can be reasonably estimated are summarized as follows:
2018 | 2019 | 2020 | 2021 | 2022 and thereafter | Total | |
---|---|---|---|---|---|---|
Service contracts | 2,564 |
2,284 | 1,705 | - | - | 6,553 |
9. Contingent liabilities
Claims have been made against the PSC in the normal course of operations. The PSC has recorded an accrued liability of $30,000 ($0 at March 31, 2016) where it is likely that there will be a future payment and a reasonable estimate of the loss can be made.
10. Related party transactions
-
Common services provided without charge by other government departments
During the year, the PSC received services without charge from certain common service organizations, related to accommodation, employer's contribution to the health and dental insurance plans, legal services, workers' compensation coverage and information technology services. These services provided without charge have been recorded in the PSC's Statement of Operations and Net Financial Position as follows.
Services (in thousands of dollars)2017 2016 Accommodation 9,906 10,015 Employer's contribution to the health and dental insurance plans 5,792 5,357 Information technology services 4,736 4,735 Legal services 1,334 872 Workers' compensation 45 39 Total 21,813 21,018 The Government has centralized some of its administrative activities for efficiency, cost-effectiveness purposes and economic delivery of programs to the public. As a result, the Government uses central agencies and common service organizations so that one department performs services for all other departments and agencies without charge. The cost of payroll and cheque issuance services provided by Public Services and Procurement Canada is not included in the Department's Statement of Operations and Departmental Net Financial Position.
-
Other transactions with related parties
(in thousands of dollars)2017 2016 Expenses - Other government departments and agencies 14,187 13,830 Revenues - Other government departments and agencies 8,322 8,704 Expenses and revenues disclosed in (b) exclude common services provided without charge, which are already disclosed in (a).
Expenses disclosed in (b) include other information technology services and legal services that are specific to the needs of the PSC and are received with charge from common service organizations. The cost of these services has been recorded in the PSC’s Statement of Operations and Net Financial Position.
11. Segmented information
Presentation by segment is based on the PSC’s program alignment architecture. The presentation by segment is based on the same accounting policies as described in the Summary of significant accounting policies in note 2.
Revenues from assessment and counselling services are derived from the provision of services and products developed by the PSC to help public sector managers select and develop competent staff. These services and products are provided by the PSC’s Personnel Psychology Centre (PPC) and seven PSC regional offices. The PSC has the authority to re-spend these revenues to offset expenditures incurred in the same year for the provision of assessment and counselling services and products.
The following table presents the expenses incurred and revenues generated for the main programs, by major object of expense and by major type of revenue. The segment results for the period are as follows:
Staffing services and assessment |
Internal services | Oversight of integrity in staffing and of non-partisanship | Staffing system integrity and political impartiality | 2017 Total | 2016 Total | |
---|---|---|---|---|---|---|
Expenses | ||||||
Salaries and employee benefits | 27,337 | 22,822 | 12,842 |
9,805 |
72,806 |
75,939 |
Professional and special services | 5,233 | 6,796 | 1,366 | 810 |
14,205 | 12,396 |
Accommodation | 3,783 | 3,394 | 1,588 | 1,141 |
9,906 |
10,015 |
Transportation and telecommunications | 539 | 212 | 52 |
24 |
827 | 421 |
Amortization of tangible capital assets | 535 |
39 |
- |
2 |
576 |
686 |
Informatics, office equipment, furniture and fixtures | 15 |
759 |
- |
1 |
775 |
1,321 |
Repair and maintenance | 2 | 256 |
- | - | 258 | 117 |
Rentals | 538 |
1,332 |
486 |
17 |
2,373 |
1,843 |
Printing and publications | 54 |
274 |
1 |
60 |
389 | 236 |
Utilities, materials and supplies and other | 1,099 |
(775) |
92 |
(52) | 364 | 345 |
Total Expenses | 39,135 | 35,109 | 16,427 | 11,808 | 102,479 | 103,319 |
Revenues | ||||||
Assessment and counselling services | 8,375 | - | - | - | 8,375 | 8,634 |
Miscellaneous revenues | 1,227 | - | - | - | 1,227 | 1,267 |
Revenues earned on behalf of Government | (1,221) | - |
- | - | (1,221) |
(1,255) |
Total Revenues | 8,381 | - | - | - | 8,381 | 8,646 |
Net cost of operations before government funding and transfers | 30,754 |
35,109 |
16,427 |
11,808 |
94,098 |
94,673 |
12. Comparative information
Comparative figures have been reclassified to conform to the current year's presentation.
Annex to the Statement of Management Responsibility Including Internal Control over Financial Reporting for 2016-17 (Unaudited)
1. Introduction
This document provides summary information on the measures taken by the Public Service Commission (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 program activities can be found in the 2016-17 Departmental Results Report and the 2017-18 Departmental Plan.
2. 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 organizational internal control management framework, approved by the President, 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 in their areas of responsibility for control management;
- Values and ethics;
- Ongoing communication and training on statutory requirements, and policies and procedures for sound financial management and control; and
- Monitoring of and regular updates on internal control management, as well as the provision of related assessment results and action plans to the President and organizational senior management and, as applicable, to the PSC’s Internal Audit Committee (IAC).
The IAC 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 organizations for the processing of certain transactions that are recorded in its financial statements as follows.
Common arrangements
- Public Services and Procurement Canada (PSPC) 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;
- The Treasury Board of Canada Secretariat (TBS) provides the PSC with information used to calculate the accrued severance liability;
- The Department of Justice Canada provides legal services to the PSC; and
- Shared Services Canada (SSC) provides information technology (IT) infrastructure services to the PSC in the areas of data center and network services.
Specific arrangements
- Veterans Affairs Canada (VAC) provides the PSC with Oracle’s PeopleSoft platform to capture and report all human resources data, which is used in the calculation of the liability for vacation pay and compensatory leave.
3. Assessment Results during Fiscal Year 2016-17
During 2016-17, the PSC completed design and operating effectiveness testing in various key control areas.
3.1 Design effectiveness testing of key controls
In 2016-17, the PSC completed planned design effectiveness testing of the payroll process.
No significant design deficiencies were found. For areas identified for improvement, corrective actions will be implemented in 2017-18.
3.2 Operating effectiveness testing of key controls
In 2016-17, the PSC completed planned operating effectiveness testing of the payroll process.
No significant control issues or deficiencies were found. For areas identified for improvement, corrective actions will be implemented in 2017-18.
3.3 Ongoing monitoring program
In 2016-17, the PSC completed planned ongoing monitoring of its IT General Controls and Entity-Level Controls.
No significant control issues or deficiencies were found. For areas identified for improvement, corrective actions will be implemented in 2017-18.
4. Action Plan
4.1 Progress during fiscal year 2016-17
The PSC continued to conduct its ongoing monitoring according to the previous fiscal year's rotational plan as shown in the following table:
Previous year's rotational ongoing monitoring plan for current year | Status |
---|---|
Payroll | Completed planned design effectiveness and operating effectiveness testing |
Entity-Level Controls | Completed as planned |
IT General Controls (under PSC management) |
Completed as planned |
4.2 Action plan for the next fiscal year and subsequent years
The PSC's rotational ongoing monitoring plan over the next three years, based on an annual re-validation of the high-risk processes, is shown in the following table:
Business Process Cycle | Overall Risk | Frequency | 2016-2017 | On-Going Monitoring Rotation | ||
---|---|---|---|---|---|---|
2017-18 | 2018-19 | 2019-20 | ||||
Payroll | High |
Every year | Yes | Yes |
Yes |
Yes |
Expenses and Accounts Payable | Medium | Every 2 years | No | Yes | No | Yes |
Revenues and Accounts Receivable | Medium | Every 2 years | No |
Yes | No | Yes |
System Access | Medium | Every 2 years | No | Yes | No | Yes |
Capital Assets | Low | Every 3 years | No | No |
Yes |
No |
Financial Reporting | Low | Every 3 years | No | No | Yes | No |
Entity Level Controls | Low | Every 3 years | Yes |
No | No | Yes |
IT General Controls (under PSC management) | Low | Every 3 years | Yes |
No | No | Yes |
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