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Annex to the Statement of Management Responsibility Including Internal Control Over Financial Reporting Treasury Board of Canada Secretariat Fiscal Year 2022–23

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  1. Introduction
  2. Departmental system of internal control over financial reporting
  3. Departmental assessment results during fiscal year 2022–23
  4. Departmental action plan for the next fiscal year and subsequent fiscal years
  5. Common service providers’ annual assessment results for fiscal year 2022–23
  6. Common service providers’ action plan for the next fiscal year and subsequent fiscal years

1. Introduction

This document provides a summary of the measures taken by the Treasury Board of Canada Secretariat (TBS) to maintain an effective system of internal control over financial reporting (ICFR), including information on internal control management, assessment results and related action plans.

Detailed information on TBS’s authority, mandate and programs can be found in its most recent Departmental Plan and Departmental Results Report.

2. Departmental system of internal control over financial reporting

2.1 Internal control management

TBS has a well-established governance‑and accountability structure to support departmental assessment efforts and oversight of its system of internal control. This structure is formalized in TBS’s Framework for Internal Controls Over Financial Management, approved by the Secretary, and includes the following:

  • organizational accountability structures as they relate to internal control management to support sound financial management, including the roles and responsibilities of senior managers in their areas of responsibility for internal control management
  • a Values and Ethics Office, which provides educational and awareness programs and has developed a departmental code of conduct
  • ongoing communication and training on statutory requirements, policies and procedures for sound financial management and control
  • monitoring of, and regular updates on, internal control management, as well as the provision of related assessment results and action plans to departmental senior management and TBS’s Audit Committee

The Audit Committee is an independent and objective advisory committee to the Secretary. It is responsible for providing advice to the Secretary on the adequacy and functioning of TBS’s risk management, control, and governance frameworks and processes.

2.2 Service arrangements relevant to financial statements

TBS relies on other organizations for the processing of certain transactions that are recorded in its financial statements as follows.

Common service arrangements

  • Public Services and Procurement Canada (PSPC) centrally administers the payment of salaries and the procurement of goods and services in accordance with TBS’s Delegation of Authority and provides real property services
  • The Department of Justice Canada provides legal services to TBS
  • Shared Services Canada provides information technology (IT) infrastructure services to TBS, such as data centres and network services
  • TBS, a central agency, provides services related to insurance plans for federal public service employees and centrally administers payment of the employer’s share of contributions to statutory employee benefit plans (the Public Service Pension Plan, Employment Insurance (EI) Plan, the Canada Pension Plan or Québec Pension Plan (CPP/QPP), and the Supplementary Death Benefit Plan) on behalf of other departments and agencies

Readers of this annex may refer to the annexes of the above-noted organizations for a greater understanding of the systems of ICFR related to these services.

TBS relies on other external service providers and departments for the processing of certain transactions or information that are recorded in its financial statements as follows:

Specific arrangements

  • The Office of the Chief Actuary within the Office of the Superintendent of Financial Institutions Canada prepares a triennial actuarial valuation of the Public Service Pension Plan
  • PSPC performs the day-to-day administration of the Public Service Pension Plan
  • PSPC performs the day-to-day administration of some centrally funded expenses, such as the employer’s share of CPP/QPP contributions, EI premiums and provincial payroll taxes. These types of expenses are recorded on TBS’s financial statements and reflect the Treasury Board’s role as the employer of the public service
  • TBS relies on the internal controls of a number of insurance companies (at present, Sun Life, and Canada Life Assurance Company (commonly known as Canada Life), Industrial Alliance and Manulife), which provide services such as health care plan administration, dental plan administration and insurance services. As external service providers, pursuant to contracts with the Government of Canada, these insurance companies have the authority and responsibility to ensure that these services are managed in accordance with the terms and conditions set out by TBS’s Employee Relations and Total Compensation (ERTC) sector

TBS provides certain optional corporate services (for example, accounting services and financial systems) to several departments on a cost-recovery basis. These services are governed by memoranda of understanding between TBS and other government departments.

3. Departmental assessment results during fiscal year 2022–23

Table 1. Progress during the fiscal year 2022–23
Previous year’s rotational ongoing monitoring plan for current year Status
Chief Financial Officer (CFO) Attestation Fiscal year 2022–23 activities completed as planned; remedial actions started.
IT Assets Tracking Fiscal year 2022–23 activities completed as planned:
  • documentation updated
  • design and operating effectiveness testing expected to be completed by fall 2023
Public Service Management Insurance Plan (PSMIP) Fiscal year 2022–23 activities completed as planned; remedial actions started
Disability Insurance (DI) Fiscal year 2022–23 activities completed as planned; remedial actions started
Provincial Payroll Taxes (PPT) Fiscal year 2022–23 activities completed as planned; remedial actions started

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

3.1 New or significantly amended key controls

In the current year, there were no significant amended key controls in existing processes that required a reassessment. However, the Internal Control Unit conducted a detailed risk assessment exercise to determine whether changes were required to the ongoing monitoring plan and/or risk rating for the business processes. The results of the detailed risk assessment indicate that some business process owners have implemented additional measures to mitigate the risk exposure, thus strengthening the internal control environment at TBS.

3.2 Ongoing monitoring program

As part of its rotational ongoing monitoring plan, TBS completed its reassessment of the financial controls related to the CFO Attestation, IT Assets Tracking, Public Service Management Insurance Plan, Disability Insurance and Provincial Payroll Taxes. For the most part, the key controls that were tested performed as intended, with remediation (where required) as follows:

CFO Attestation

  • Explore ways to increase the transparency of financial risk in the CFO attestation
  • Provide guidance and support, including training to sectors to set expectations

IT Assets Tracking

  • The initial phase of the assessment indicates the existing IT assets tracking process requires an overhaul and an automated tool to manage the IT assets and office furniture effectively; the assessment is expected to be completed in fall 2023

Public Service Management Insurance Plan

  • Develop a documented process that includes tools such as a checklist, peer reviews, approvals and instructions that clearly identify the requirements and schedules to meet reporting requirements
  • Engage with plan suppliers to request that sufficient data is provided to TBS to facilitate a post-payment verification on a sample basis, either monthly or quarterly (at minimum), to validate that the amounts are accurate and legitimate
  • The post-payment verification should include the amounts on invoices to PSPC and validate that the interdepartmental settlement amounts are accurate
  • Develop a records management strategy to maintain records that support and represent fairly all financial transactions and allow for the preparation of internal and external financial information

Disability Insurance

  • Develop a documented process that includes tools such as a checklist, peer reviews, approvals and instructions that clearly identify the requirements and schedules to meet reporting requirements
  • Engage with plan suppliers to request that sufficient data is provided to TBS to facilitate a post-payment verification on a sample basis, either monthly or quarterly (at minimum), to validate that the amounts are accurate and legitimate
  • The post-payment verification should include the amounts on invoices to PSPC and validate that the interdepartmental settlement amounts are accurate
  • Develop a records management strategy to maintain records that support and represent fairly all financial transactions and allow for the preparation of internal and external financial information

Provincial Payroll Taxes

  • Develop a documented process that includes tools such as a checklist, peer reviews, approvals and instructions that clearly identify the requirements and schedules to meet reporting requirements
  • Engage with provincial tax offices to request that sufficient data is provided to TBS to facilitate a post-payment verification on a sample basis, either monthly or quarterly (at minimum), to validate that the amounts are accurate and legitimate
  • The post-payment verification should include the amounts on invoices to PSPC and validate that the interdepartmental settlement amounts are accurate
  • An action plan that addresses the remediation described above is underway.
  • TBS also completed a detailed risk assessment in fiscal year 2022–23, the results of which were used to update TBS’s risk-based ongoing monitoring plan (see sections 4 and 6).

4. Departmental action plan for the next fiscal year and subsequent fiscal years

TBS’s rotational ongoing monitoring plan for the next three years, presented in Table 2, is based on its annual risk assessment.

Table 2. Rotational ongoing monitoring plan
Key control areas Fiscal year 2023–24 Fiscal year 2024–25 Fiscal year 2025–26
Entity-level controls No No Yes
IT general controls (ITGCs)table 2 note 1 under departmental management No Yes No
Financial reporting and closing cycletable 2 note 2 No No No
Budgeting and forecasting No Yes No
CFO attestations and costingtable 2 note 2 No No No
Investment planning Yes No No
Payroll and benefits No No Yes
Operating expenses and accounts payable No No Yes
Revenues and account receivables No Yes No
Capital assets No Yes No
IT asset tracking (tablets) Yes No No

Table 2 Notes

Table 2 Note 1

ITGCs related to Central Agency Cluster Shared Systems (CAC‑SS) are out of scope for TBS’s ongoing monitoring plan. The SAP system is audited annually by the Office of the Comptroller General based on client needs and service arrangements.

Return to table 2 note 1 referrer

Table 2 Note 2

The Financial Reporting and Closing Cycle and CFO Attestation processes have both recently been assessed and are considered low risk. Future assessments for these processes are planned for 2026–27 and 2027–28. respectively.

Return to table 2 note 2 referrer

5. Common service providers’ annual assessment results for fiscal year 2022–23

TBS provides common services related to the administration of public service insurance plans (TBS Vote 20) and the cost-recovery process for statutory employee benefit plans. Because TBS manages government-wide funds and public service employer payments, other government departments and agencies rely on TBS to process transactions that impact their financial statements with respect to the insurance, employee benefits and statutory pay related transactions outlined in Table 3.

In delivering these common services, TBS uses data produced by federal pay systems, including Phoenix, which is centrally administered by PSPC. Significant interdependencies exist between PSPC’s and TBS’s pay administration processes because many of the key controls related to the processing of insurance premiums, employee benefits and other pay-related transactions are automated in the pay system. Although TBS carries out ongoing monitoring activities for controls that are under its responsibility, it must rely on the PSPC control environment for assurance as to the integrity of the data it uses in delivering common services.

In fiscal year 2022–23, TBS, as a common service provider, completed a risk-based assessment of internal controls related to common services. Specifically, it reassessed, with the assistance of Samson & Associates, the operational effectiveness of financial controls for the Public Service Management Insurance Plan, Disability Insurance Plan and Provincial Payroll Taxes. During the period examined, all the tested key controls related to PSMIP, DI and PPT were found to be operating effectively operating, with four exceptions for PSMIP and DI, and three for PPT. The Internal Control unit will continue to work with ERTC sector to strengthen the internal controls associated with these business processes.

6. Common service providers’ action plan for the next fiscal year and subsequent fiscal years

TBS, as a common service provider of public service insurance and statutory employee benefit plans, has completed its annual risk-based assessment of the internal controls for these services, via a detailed risk assessment. The results of this assessment are reflected in the rotational ongoing monitoring plan in Table 3.

Table 3. Rotational ongoing monitoring plan for common services
Key control areas Fiscal year 2023–24 Fiscal year 2024–25 Fiscal year 2025–26 Fiscal year 2026–27 Fiscal year 2027–28
Public Service Health Care Plan No No No Yes No
Public Service Dental Care Plan No No No Yes No
Pensioners’ Dental Care Plan No No No Yes No
Disability Insurance Plan No No No No Yes
Public Service Management Insurance Plan No No No No Yes
Provincial payroll taxes No No No No Yes
Provincial health insurance plan premiumstable 3 note 1 No Yes Not applicable Not applicable Not applicable
Québec Parental Insurance Plan No No Yes No No
Public Service Pension Plan Yes No No No No
Supplementary Death Benefit Yes No No No No
Canada Pension Plan or Québec Pension Plan (CPP/QPP) No No Yes No No
Employment Insurance (EI) premiums No No Yes No No
Program Administration costs (as it relates to TBS Vote 20 program) No Yes No No No

Table 3 Notes

Table 3 Note 1

Internal control assessment of the British Columbia Medical Services Plan (BC MSP) wind-up process. This program will not continue after the wind-up process has been completed and will be removed from future ongoing monitoring plans.

Return to table 3 note 1 referrer

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