Complete text - 2014–15 Departmental Performance Report - Treasury Board of Canada Secretariat

Raison d'être

The Treasury Board of Canada Secretariat (Secretariat) is the administrative arm of the Treasury Board, and the President of the Treasury Board is the Minister responsible for the Secretariat. This organization supports the Treasury Board by making recommendations and providing advice on program spending, regulations and management policies and directives, while respecting the primary responsibility of deputy heads in managing their organizations, and their roles as accounting officers before Parliament. In this way, the Secretariat strengthens the way government is managed and helps to ensure value for money in government spending and results for Canadians.

Responsibilities

The Secretariat supports the Treasury Board in each of its roles (see text box “Treasury Board Roles”). Within the Secretariat, the Comptroller General of Canada provides government-wide leadership, direction, oversight and capacity building for financial management, internal audit and the management of assets and acquired services. The Chief Human Resources Officer provides government-wide leadership on people management through policies, programs and strategic engagements and by centrally managing labour relations, compensation, pensions and benefits and contributing to the management of executives. The Chief Information Officer provides government-wide leadership, direction, oversight and capacity building for information management, information technology, government security (including identity management) and access to information, privacy, and internal and external service delivery.

The Treasury Board Portfolio consists of the Secretariat and the Canada School of Public Service. The Public Sector Pension Investment Board, the Office of the Commissioner of Lobbying of Canada and the Office of the Public Sector Integrity Commissioner of Canada are arm’s-length organizations that report to Parliament through the President of the Treasury Board.

When working with federal departments, agencies and Crown corporations, the Secretariat plays three central agency roles:

• A leadership role in driving and modelling excellence in public sector management and in identifying and launching government-wide horizontal initiatives that target administrative efficiencies;
• A challenge and oversight role that includes reporting on the government’s management and budgetary performance and developing government-wide management policies and standards; and
• A community enabling role to help organizations improve management performance.

Strategic Outcome and Program Alignment Architecture^{Footnote 1}

In 2014–15, the Secretariat’s Program Alignment Architecture included six programs that contributed to the achievement of its Strategic Outcome, “Government is well managed and accountable, and resources are allocated to achieve results.” Detailed information about the Secretariat’s Strategic Outcome and about each program can be found in Section II: Analysis of Programs by Strategic Outcome.

Organizational Priorities

In its 2014–15 Report on Plans and Priorities, the Secretariat established five organizational priorities that contribute to its Strategic Outcome:

• Priority 1: Strengthen government financial and expenditure management to support value for money, ongoing cost-containment and increased operational efficiency;
• Priority 2: Modernize people management to support a productive, high-performing, and affordable public service;
• Priority 3: Provide leadership in information management (IM) and strategic use of information technology (IT) to enable more efficient and effective enterprise delivery of government programs and services;
• Priority 4: Further reduce red tape for business, and streamline internal government rules to increase efficiency and reduce costs; and
• Priority 5: Continue to implement the Secretariat’s workplace renewal initiative to modernize its office space, technology and internal operations and improve efficiency.

The results achieved under each priority are summarized below. Further information on results can be found in the “Performance Analysis and Lessons Learned” section of each of the Secretariat’s programs in Section II: Analysis of Programs by Strategic Outcome.

Risk Analysis

The Secretariat actively monitors its operating environment to identify and manage risks that could affect progress toward its Strategic Outcome and organizational priorities. Key risks are captured in the Secretariat's Corporate Risk Profile, which is updated annually. These risks are outlined in the table and narrative below.

In 2014–15, the Secretariat continued to work in a dynamic environment to promote good governance and sound stewardship and enable efficient and effective service to Canadians. The Secretariat's top four risks were primarily driven by external factors—rapid technological change and the increased use of mobile devices, diminished fiscal flexibility, and the increased complexity of whole-of-government systems.

The Secretariat managed its top four risks by seeking to set clearer expectations for other government departments, by increasing engagement with departments, by strengthening the capacity of functional communities, and by improving governance over enterprise-wide initiatives.

The following risk analysis elaborates on the above-mentioned external factors and on the relevance of the identified risks.

Performance Measurement

The World Bank’s Government Effectiveness indicator is an index that captures perceptions about the quality of public services, the quality of the civil service, and the degree of its independence from political pressure. This indicator also measures the quality of policy formulation and implementation, and the credibility of the government’s commitment to these policies. In 2014, the last ranking released, Canada ranked 9th among the 34 OECD countries for this indicator. While the result represents a decrease from 2012 when Canada ranked 6th, it remains on target, and Canada retains its position in the 95th percentile of all countries measured. Canada’s lower ranking reflects improvements in government effectiveness in other OECD countries, rather than a drop in Canada’s effectiveness.

Performance Analysis and Lessons Learned

To improve management practices in the Government of Canada, the Secretariat introduced significant changes to the Management Frameworks program in 2014–15, including renewing the Management Accountability Framework (MAF) and launching the Internal Red Tape Reduction initiative.

The Secretariat uses the MAF to gain a broad perspective on the state of management practices and performance in the federal government and to monitor key areas of policy compliance and implementation. Following broad-based government-wide engagement, a renewed MAF was launched in 2014–15. The renewed assessment process provides analysis relating to departmental management practices and policy compliance, as well as performance outcomes and other results.

More details on performance in key policy areas will be discussed in the associated sub-programs. Following are a few high-level results related to this performance indicator:

• Integrated risk management: All departments and agencies assessed demonstrated that they had integrated risk management practices. This confirms that risk management is a well-established practice across the Government of Canada.
• Management of security: Of the 20 departments and agencies assessed in this category, the majority had established governance processes for all security activity areas. While overall performance is improving in this area, the maturity level of security management practices remains generally low and varies considerably among federal organizations.
• Citizen-focused service: On average, 17 per cent of external and internal enterprise services were e-enabled for the 11 departments assessed in this category.
• Information management and information technology: The maturity level of IT stewardship varied considerably among federal organizations, but overall performance in this area improved. Recordkeeping maturity remained generally low, though some progress has been made.

The Secretariat launched the Blueprint 2020 Internal Red Tape Reduction initiative. Public servants who engaged in the Blueprint 2020 exercise reported that many rules and processes are overly complex, that they are developed from the top down and in isolation, and that they tend to lack coherence and consistency. The Secretariat recognizes that as a large, complex organization, the federal government needs internal controls and rules to ensure sound stewardship and accountability; however, these rules and processes must be reasonable and must improve the experience of those who are obliged to adhere to them. The Secretariat established a tiger team to take a bottom-up approach to identifying issues and deriving solutions.

In 2014–15, the Secretariat also initiated a review of the Treasury Board policy suite. The objective of the review is to ensure that individual rules and requirements are proportional to the problems they are meant to address; that they align within the policy suite; and that they are cost-effective for departments and agencies to implement, comply with, and report on.

Sub-Program 1.1.1: Strategic Management and Governance

Through the Strategic Management and Governance sub-program, the Secretariat provides leadership across the Government of Canada to establish a broad management agenda and promote strategic approaches to cross-cutting policy issues on public sector management. Policy centres and federal institutions receive advice and support to maintain the integrity of the suite of Treasury Board policies and review and refine policy instruments to ensure they reflect government priorities, achieve management goals, appropriately manage risk and impose minimal administrative burden.

Sub-program 1.1.1 also identifies new and emerging management and governance issues; promotes increased productivity and innovation in management practices; advances modern reporting; and develops efficient, cost-effective approaches to planning, risk management and oversight and to strengthening the government's operating environment.

Actual spending and FTEs aligned with planned spending and FTEs.

Sub-Program 1.1.2: Sound Management and Decision Making

Through the Sound Management and Decision Making sub-program, the Secretariat provides independent strategic advice, guidance and support to federal organizations for implementing and applying Treasury Board policies, government priorities, risk-management strategies and performance management in support of sound decision making.

Sub-program 1.1.2 includes the Secretariat’s advice and guidance on resource allocation, risks and policy compliance, provided to departments and agencies during the due diligence review of Treasury Board submissions.

It also includes the Secretariat’s MAF activities, which set out the Treasury Board’s expectations for good public service management. MAF is an integrated assessment tool that helps managers, deputy heads and central agencies assess progress and strengthen accountability for management results through indicators and measures that gauge performance over time. This sub-program captures the strategic direction and continuous evolution of MAF, which is informed by the management expectations set out in other sub-programs of the Secretariat’s PAA [Program Alignment Architecture].

Actual spending aligned with planned spending. Actual FTEs were less than planned FTEs because planned FTEs were revised to align with ongoing salary budgets.

Sub-Program 1.1.3: Service Modernization

Through the Service Modernization sub-program, the Secretariat provides direction and oversight to federal organizations to enhance internal and external service delivery efficiency and to improve service experiences and outcomes for individuals, businesses and employees.

Sub-program 1.1.3 works to promote client-centred service; build operational efficiency through a whole-of-government approach to service delivery; develop a culture of collaboration and service excellence; integrate multi-channel service delivery through effective use of modern technology; and enable the effective use of online technologies, including social media and collaborative technologies. This is accomplished through research, analysis, development and maintenance of policies and related policy instruments, community engagement, and leadership.

The authority for this sub-program is the Financial Administration Act.

Actual spending and FTEs were higher than planned spending and FTEs, mainly due to an in-year increase in funding to support the Web Renewal initiative.

Sub-Program 1.1.4: Information Management, Access and Privacy

Through the Information Management, Access and Privacy sub-program, the Secretariat seeks to ensure the continual improvement of the management of information across the Government of Canada by providing strategic direction and leadership to federal institutions on record keeping, business intelligence, data management, web content management, access to information, and privacy protection.

Sub-program 1.1.4 is focused on ensuring that information is safeguarded as a public trust and managed as a strategic asset. It further seeks to ensure that information is open to the public whenever possible, that Canadians can exercise their right to access and reuse information, and that personal information is protected against unauthorized collection, use and disclosure. The sub-program's objectives are accomplished by developing and maintaining policy instruments, encouraging collaboration between government institutions, monitoring and overseeing activities, providing leadership, and working with partners. This includes community development, learning and outreach activities.

The authority for this sub-program comes from the Financial Administration Act, the Access to Information Act and the Privacy Act.

Actual spending and FTEs were higher than planned spending and FTEs, mainly due to internal reallocations made during the year to support Open Government.

Sub-Program 1.1.5: Management of Information Technology

Through the Management of Information Technology sub-program, the Secretariat provides federal organizations with strategic direction and leadership on the management of information technology (IT). Its whole-of-government strategies focus on standardizing, consolidating and re-engineering IT systems to enable effective program and service delivery. The Secretariat also optimizes Government of Canada IT investments through effective management and governance of IT-enabled projects, and supports Shared Services Canada, a centralized department that provides email, data centre and network services to the largest departments in the Government of Canada.

Sub-program 1.1.5 objectives are achieved through IT frameworks, policies, directives and standards, such as the Treasury Board Information Technology Standards (TBITS), that guide Government of Canada institutions in implementing specific technical issues. The Secretariat monitors departmental implementation of this sub-program through oversight, evaluation, and reporting activities, including a challenge function that seeks to ensure best value in IT and web investments on behalf of taxpayers.

The authority for this program is the Financial Administration Act.

Actual spending was higher than planned spending due to internal adjustments made at the beginning of the fiscal year to realign resources between the Management of Information Technology and Government Security sub-programs.

Sub-Program 1.1.6: Government Security

Through the Government Security sub-program, the Secretariat contributes to improving the Government of Canada's security by supporting departmental and government-wide security management to protect information, assets, individuals and services against internal and external threats. Sub-program 1.1.6 focuses on governance, departmental security management (including cyber security), identity management, individual security screening, physical security, security of information and information technology, security in contracting, and the continuity of government operations and services. These activities enable effective and efficient management of security within departments and throughout government.

The objectives of this sub-program are accomplished through developing and maintaining policy instruments; enabling the security community by providing guidance and sharing best practices; encouraging collaboration between departments; monitoring and overseeing security activities; providing leadership and working with partners; developing a cyber-authentication renewal and federating identity program in support of service modernization; and supporting Government of Canada strategic security initiatives, including initiatives related to Canada's Cyber Security Strategy.

The authority for this program derives from the Financial Administration Act.

Actual spending and FTEs were lower than planned spending and FTEs, due to internal adjustments made at the beginning of the fiscal year to reallocate resources from the Government Security sub-program to the Management of Information Technology sub-program.

Sub-Program 1.1.7: Communications and Corporate Identity

Through the Communications and Corporate Identity sub-program, the Secretariat helps Government of Canada departments and agencies effectively manage communications and corporate identity within their organizations. Sub-program 1.1.7 is necessary to ensure that federal organizations inform the public of government policies, programs, services and initiatives; consider the public's views and needs in their development; and visually identify government assets and activities through the official symbols of the Government of Canada.

To meet these goals, the Secretariat proposes government-wide policy direction to Treasury Board ministers, implements approved policy instruments, examines the extent to which departments are in compliance with key policy requirements, and takes corrective measures to address compliance issues. To assist compliance with policy requirements, the Secretariat provides policy interpretation, advice and outreach to all government departments and agencies, in particular to communications staff.

The legislative authority for this program is section 7 of the Financial Administration Act.

Actual spending was higher than planned spending, mainly due to paylist expenditures. Actual FTEs aligned with planned FTEs.

Sub-Program 1.1.8: Regulatory Management

Through the Regulatory Management sub-program, the Secretariat supports the Treasury Board as a committee of ministers in considering Governor in Council regulations and orders. Regulation is one of the key instruments to advance the government's policy agenda and to fulfill statutory responsibilities through a number of acts to protect the health, safety and security of Canadians, their environment and economy. Regulations must be developed and implemented in a way that reduces burden on business, makes it easier to do business with regulators, and improves service and predictability for all stakeholders. Canada's regulatory policy is the Cabinet Directive on Regulatory Management.

The Secretariat supports the Treasury Board for the continuum of regulatory development, implementation and monitoring through its three main business lines: 1) Challenge function—regulatory proposals are reviewed on a submission-by-submission basis to ensure quality design; 2) Policy leadership—guidelines and tools are developed to assist departments in complying with the directive when preparing regulatory submissions, including new requirements related to systemic regulatory reforms; and 3) Oversight—ongoing monitoring and reporting of regulatory system performance to support red tape reduction efforts.

Actual spending was lower than planned spending, mainly due to project delays. Actual FTEs aligned with planned FTEs.

Performance Analysis and Lessons Learned

Effective people management was evaluated as part of the renewed MAF assessment process, which replaced aggregate ratings (described in the performance indicators above) with more detailed analysis and specific measures for official languages and values and ethics.

The assessment identified a number of areas of strength in people management:

• Representation and recruitment of all four employment equity designated groups exceeded the workforce availability.
• The first year’s implementation of the new Directive on Performance Management progressed well. Almost all employees government-wide had documented performance objectives (94.68 per cent). The majority (90.85 per cent) had mid-year conversations on performance, and 85.13 per cent of employees were rated and assessed at year-end.
• The results of the 2014 Public Service Employee Survey (PSES) confirmed that most employees government-wide felt they are treated with respect; liked their job; and had the information, training, and equipment they need for a safe and healthy workplace.
• Almost all organizations met the requirements of the Policy on Conflict of Interest and Post-Employment and the Policy on Official Languages.
• The employee turnover remained low across large and small departments and agencies.

Areas for improvement in people management were also identified:

• The 2014 PSES results showed that employee perceptions of harassment and discrimination in the workplace were significantly less positive than in 2011. Fewer than half of employees felt they could initiate a formal recourse process without fear of reprisal.
• Confidence in senior management remained low; fewer than half of employees believed that senior management makes effective and timely decisions, and even fewer believed that unsatisfactory performance is managed effectively.
• Promotions for Aboriginal persons and persons with disabilities were low, and their turnover was high compared with other federal government employees.
• The time it takes to staff key positions and track sick leave trends was also identified as an area for improvement.

Sub-Program 1.2.1: Direction Setting

Through the Direction Setting sub-program, the Secretariat ensures that organizations of the core public administration receive high-quality advice, guidance and support for people management and related policy instruments.

Sub-program 1.2.1 includes developing and implementing strategic frameworks; establishing, assessing and monitoring performance expectations; and establishing risk-based policies in areas of employer responsibility.

This sub-program is supported by research, forecasting and business intelligence to enable evidence-based decision making.

Actual spending and FTEs largely aligned with planned spending and FTEs.

Sub-Program 1.2.2: Enabling Infrastructure.

Through the Enabling Infrastructure sub-program, the Secretariat guides and supports deputy heads’ collective responsibility for putting in place efficient and effective people management through common business processes, information systems, best practice tools and sound data.

The objectives of sub-program 1.2.2 are achieved by strengthening the existing governance of human resources management; championing the human resources functional community; and establishing a broad engagement strategy to facilitate a shift in human resources practices, behaviours and relationships, while leveraging Web 2.0 technology. Defining a common way to deliver human resources services throughout the Government of Canada will establish a comprehensive blueprint for deriving data architecture and definitions.

The Secretariat builds on this foundation by maximizing investments made in information technology solutions for modernizing human resources services and programs and by increasing its capacity to define, capture and measure business intelligence, and understand the perceptions and needs of public servants.

Actual spending and FTEs were lower than planned spending and FTEs, mainly due to the transfer of programs to the Canada School of Public Service.

Sub-Program 1.2.3: Comprehensive Management of Compensation

Through the Comprehensive Management of Compensation sub-program, the Secretariat provides advice to the Treasury Board, the Department of Finance Canada, the Privy Council Office and other federal organizations in support of the Treasury Board’s management office, employer and budgeting roles.

Comprehensive compensation management encompasses wages and other cash compensation, including pay equity and equitable compensation. It involves establishing and maintaining public service pensions and benefits and other non-monetary forms of compensation, such as terms and conditions of employment and other related workplace policies.

The Secretariat develops plans and strategies related to total compensation through collective bargaining; external, independent advisory committees; and active stakeholder engagement with organizations, bargaining agents and separate agencies, the Canadian Armed Forces and the Royal Canadian Mounted Police (RCMP). This allows the Government of Canada to appropriately recruit and retain its workforce. To support consistency and results, the Secretariat performs an oversight and performance management function in applying its workforce policies to ensure program delivery standards for all employees, including executives.

Actual spending was higher than planned spending, mainly due to new funding received for the payout of an out-of-court settlement to eligible claimants under the White class action lawsuit. Actual FTEs were lower than planned FTEs mainly due to delays related to the administration of the Public Service Superannuation Act.

Performance Analysis and Lessons Learned

The Policy on Management, Resources and Results Structures supports evidence-based decision making through the development of a common government-wide approach to identifying programs and to collecting, managing, and reporting on financial and non-financial information related to those programs.

As a result of MAF renewal, the Secretariat replaced aggregate ratings for managing for results (described in the performance indicators above) with a more tailored analysis. The 2014–15 MAF assessment process indicated that federal organizations’ Program Alignment Architectures and Performance Measurement Frameworks comply with the Policy on Management, Resources and Results Structures and are being used for planning, reporting, managing for results, and trend analysis. The Secretariat continued to work with organizations to further improve the overall quality of Program Alignment Architectures and Performance Measurement Frameworks.

The Policy on Evaluation supports the collection of credible, neutral evidence about the relevance and performance of direct program spending. Such information is used to improve policies and programs, to manage expenditures, to provide advice for Cabinet decisions, and to report to the public.

As a result of MAF renewal, the assessment of the evaluation function as part of the MAF was placed on hold. Nonetheless, the performance of the government-wide evaluation function was monitored through the Annual Report on the Health of the Evaluation Function. In general, it was found that organizations complied with the Policy on Evaluation and demonstrated acceptable evaluation coverage, quality and use. The Secretariat continued to work with organizations to improve the collection of performance measurement data needed to support the evaluation of program effectiveness, efficiency and economy.

Sub-Program 1.3.1: Results-Based Expenditure Management

Through the Results-Based Expenditure Management sub-program, the Secretariat aims to ensure that program spending focuses on results, provides value for taxpayers’ money, and aligns with government priorities.

The Secretariat undertakes outreach activities, provides guidance and assesses performance so that federal organizations are equipped with the knowledge, tools and resources needed to manage for results. The Secretariat also supports reviews of government spending to drive excellence in program performance and services to Canadians, and to ensure value for money.

The Policy on Management, Resources and Results Structures and the Policy on Evaluation underpin this sub-program.

Actual spending aligned with planned spending. Actual FTEs were lower than planned FTEs, mainly due to staffing delays.

Sub-Program 1.3.2: Expenditure Management Advice and Reporting

Through the Expenditure Management Advice and Reporting sub-program, the Secretariat supports sound decision making by providing reliable, detailed and timely information and by reporting on spending and resource allocation.

In support of the Treasury Board’s budget management role in the government-wide expenditure cycle (i.e., expenditure planning, resource allocation and decision making), the Secretariat provides independent analysis and advice to the Treasury Board and exercises a challenge function for expenditure and other proposals from federal organizations.

The Secretariat also develops departmental and whole-of-government views of expenditure management and provides support during the annual budget process, as well as advice on access to the Treasury Board’s Central Votes and management reserve. The Secretariat leads the process for obtaining parliamentary approval of appropriation acts by preparing the government’s Main and Supplementary Estimates for tabling in the House of Commons; explaining Estimates requirements to parliamentary committees; and providing ongoing guidance and strategic advice to government departments and agencies in preparing their Reports on Plans and Priorities and Departmental Performance Reports.

This sub-program also includes reporting to Parliament and Canadians more broadly at the whole-of-government level.

Actual spending aligned with planned spending. Actual FTEs were lower than planned FTEs to align with ongoing salary budgets.

Sub-Program 1.3.3: Compensation Expenditure Management

Through the Compensation Expenditure Management sub-program, the Secretariat provides advice to the Treasury Board, the Department of Finance Canada, the Privy Council Office and other federal organizations in support of the Treasury Board’s role in managing total compensation expenditures across the federal government. This role includes identifying total compensation and pensions and benefits cost pressures.

The Secretariat develops analysis and recommendations for managing compensation, including wages and other cash compensation, pensions and insurance benefits, and paid time off. As part of this sub-program, the Secretariat also provides advice on managing the compensation reserve.

Actual spending and FTEs largely aligned with planned spending and FTEs.

Performance Analysis and Lessons Learned

Canadians and parliamentarians expect timely, reliable information on how the government spends public funds to achieve results. The Secretariat continued to help prepare accurate financial information for the Public Accounts of Canada and The Fiscal Monitor, in support of greater transparency and accountability.

As a result of MAF renewal, the assessment of the internal audit function as part of the MAF was placed on hold. The MAF continues to assess financial management and the management of acquired services and assets.

For financial management, the renewed MAF assessment process indicated that, as a whole, the total number of errors identified in the financial information submitted to the Receiver General and the Secretariat for the Public Accounts of Canada declined in comparison with the previous two years. The financial information used in preparing the Public Accounts of Canada and The Fiscal Monitor was reported in a timely manner by the vast majority of government organizations. The Secretariat also continued its focus on chief financial officer (CFO) talent management. The majority of departments and agencies that hired new CFOs consulted the Secretariat in the appointment process.

Regarding internal audit, practice inspections demonstrated the maturity and strength of the internal audit function across the Government of Canada. The performance narrative for sub-program 1.4.2: Internal Audit provides more detailed information on the performance of this aspect of the Financial Management program.

The renewed MAF results for the management of acquired services and assets demonstrated that departments adopted key policy requirements in the areas of investment planning, project management, procurement, real property, and materiel management.

Sub-Program 1.4.1: Financial Management, Oversight and Reporting

Through the Financial Management, Oversight and Reporting sub-program, the Secretariat seeks to strengthen financial management, oversight of financial performance in departments and agencies, and financial reporting in the Government of Canada. The Secretariat establishes performance expectations for effective financial management and assists departments and agencies in achieving these expectations.

The Secretariat provides advice on the interpretation of financial policy instruments, clarifies the roles and responsibilities of policy stakeholders, monitors compliance with policy instruments, and reviews government financial statements to ensure they comply with accounting standards. It also provides enabling functions, community development and capacity building.

These activities are ultimately intended to improve the financial management function across government, as well as the quality and timeliness of the financial information provided to parliamentarians and Canadians on the state of government-wide financial results.

Actual spending was higher than planned spending, mainly due to the creation of the Costing Centre of Expertise. Actual FTEs largely aligned with planned FTEs.

Sub-Program 1.4.2: Internal Audit

Through the Internal Audit sub-program, the Secretariat provides leadership in applying the internal audit function across government and promotes independent audit assurance through internal audit practices. The Secretariat establishes performance expectations for effective internal audit. It assists departments and agencies in achieving these expectations by providing them with advice on the interpretation of the Policy on Internal Audit, clarifying the roles and responsibilities of policy stakeholders and monitoring compliance.

To further strengthen the internal audit function government-wide, the Secretariat promotes professionalism and capacity building in the internal audit community and supports the recruitment, appointment and development of external audit committee members. The Secretariat also leads horizontal audits in large departments and agencies; performs horizontal and core control audits in small departments and agencies; and, since April 2012, provides internal audit services to the regional development agencies.

The Secretariat performs this work to increase and strengthen stewardship, accountability, risk management, governance and internal controls within departments and agencies across the federal government.

Actual spending was lower than planned spending, mainly due to internal adjustments made during the year to support the Costing Centre of Expertise. Actual FTEs aligned with planned FTEs.

Sub-Program 1.4.3: Assets and Acquired Services

Through the Assets and Acquired Services sub-program, the Secretariat monitors performance on the management of real property, materiel, procurement, projects and investment planning. The Secretariat provides leadership and oversight to inform decision making by ministers and officials in central agencies and departments. It develops and implements Treasury Board’s policies to support efficient management of public assets and acquired services.

To help departments achieve performance expectations, the Secretariat provides advice on the interpretation of policies and standards, monitors compliance and facilitates capacity development within the relevant functional communities.

Actual spending was lower than planned spending largely due to an in-year transfer of expenditures to Internal Services for maintenance and support of the Directory of Federal Real Property and the Federal Contaminated Sites Directory. Actual FTEs largely aligned with planned FTEs.

Performance Analysis and Lessons Learned

Planned spending included $4.4 billion for government-wide funds in Treasury Board Votes 5, 10, 25, 30 and 33, and $2.7 billion for public service employer payments for Vote 20 and for payments made under the Public Service Pension Adjustment Act.

Total authorities available for use for Votes 5, 10, 25, 30, and 33 totaled roughly $2.0 billion at the end of the fiscal year. The Secretariat received approximately $4.4 billion in the Main Estimates and $0.6 billion in-year through the Supplementary Estimates. The Secretariat's actual spending included $2.9 billion in Treasury Board Vote 20 for public service employer payments and statutory payments under the Public Service Pension Adjustment Act, and for employer contributions made under the Public Service Superannuation Act.

Performance Analysis and Lessons Learned

In 2014–15, the Secretariat completed a number of internal initiatives to better support programs and meet corporate obligations more effectively.

The Secretariat finalized planning for its move in 2015–16 to new office accommodations, with a view to consolidating and reducing office space. It also implemented technologies to support collaboration and a mobile and connected workforce.

After a comprehensive review process, the Secretariat renewed its governance structure. The new structure provides oversight over the department’s project and resourcing issues, as well as over government-wide policy issues. Its internal processes make effective use of new technology to transition from paper-based meeting materials to electronic formats such as tablets.

In addition, the Secretariat unified multiple transformation initiatives, including Blueprint 2020 initiatives, under “This is TBS,” to create a more collaborative, open and agile organization with better enabling technologies and reduced office space.

The Secretariat renewed its Strategic Outcome, Program Alignment Architecture and Performance Measurement Framework to better support resource alignment and management for results.

a) Government-Wide Funds and Public Service Employer Payments

The Government-Wide Funds and Public Service Employer Payments program accounts for funds that are held centrally to supplement other appropriations from which allocations are made to, or payments and receipts are made on behalf of, other federal organizations. These funds supplement the standard appropriations process and meet certain responsibilities of the Treasury Board as the employer of the core public administration, including employer obligations under the public service pension and benefits plans.

b) Management Frameworks

In support of the Treasury Board’s role as management board, the Secretariat provides the framework for the management of government operations. It does so by developing specific policies, regulations, directives and guidelines that, once approved by the Treasury Board, provide the parameters within which deputy heads manage their departments. The Secretariat also helps build understanding and capacity by reaching out to the different communities within departments and agencies (e.g., finance, human resources) that support deputy heads in implementing Treasury Board policies.

c) People Management

The People Management program supports Treasury Board activities in its role as the employer of the core public administration. The program’s primary objectives are to lead people management and promote leadership excellence, to support human resources infrastructure, and to ensure the appropriate degree of consistency in people management across the public service. In certain instances, activities extend beyond the core public administration to separate agencies, members of the Royal Canadian Mounted Police and the Canadian Forces, students and appropriation-dependent Crown corporations.

d) Expenditure Management

The Expenditure Management program helps align resources to achieve government priorities in a way that maximizes value for money and provides a whole-of-government perspective on matters related to direct program spending. Working with all federal organizations that are subject to budget appropriation, the Secretariat undertakes the review, analysis and challenge of plans and proposals that involve departmental spending, expenditure forecasting and strategies, expenditure management of total compensation, and results-based management.

e) Financial Management

The Financial Management program provides oversight and direction to federal organizations to improve the stewardship of taxpayers’ dollars and government assets.

The program works to strengthen financial management, internal audit, management of real property and materiel, investment planning, project management and procurement across the federal public service. This is accomplished by providing direction to departments; demonstrating leadership; developing and maintaining policies, guidance and practices; nurturing sustainable and professional communities (e.g., finance, procurement, audit); and helping to improve government operations.

f) Internal Services

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. These include support functions such as communications, financial and human resources management, real property, information technology, legal services and procurement.

Internal Services include only those activities and resources that apply across an organization and do not include those provided for a specific program.

a) Parliamentary authorities

The Secretariat is financed by the Government of Canada through parliamentary authorities. Financial reporting of authorities provided to the Secretariat 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 2014–15 Report on Plans and Priorities. Planned results are not presented in the “Government funding and transfers” section of the Statement of Operations and Departmental Net Financial Position and in the Statement of Change in Departmental Net Debt because these amounts were not included in the 2014–15 Report on Plans and Priorities.

b) Net cash provided by government

The Secretariat operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the Secretariat is deposited to the CRF, and all cash disbursements made by the Secretariat 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 government departments.

c) Amounts due from/to the Consolidated Revenue Fund (CRF)

Amounts due from or to the Consolidated Revenue Fund (CRF) are the result of timing differences at year-end between the time 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 Secretariat is entitled to draw from the CRF without further authorities to discharge its liabilities.

d) Revenues

Revenues are accounted for in the period in which the related transaction or event that gave rise to the revenues occurred.

Revenues that are non-respendable are not available to discharge the Secretariat’s liabilities. While the Secretary is expected to maintain accounting control, she has no authority regarding the disposition of non-respendable revenues. As a result, non-respendable revenues are considered to be earned on behalf of the Government of Canada and, therefore, are presented as a reduction of the entity’s gross revenues.

e) Expenses

Expenses are recorded on an accrual basis:

• Transfer payments are recorded as expenses when authorization for the payment exists and the recipient has met the eligibility criteria or the entitlements established for the transfer payment program. Transfer payments that become repayable as a result of the realization of conditions specified in the contribution agreement are recorded as a reduction to transfer payment expenses and are set up as a receivable.
• Vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment.
• Services provided without charge by other government departments for accommodation and legal services are recorded as operating expenses at their estimated cost.

f) Government-wide employee benefits

g) Accounts receivable and advances

Accounts receivable and advances are stated at the lower of cost or net recoverable value. A valuation allowance has been recorded for receivables where recovery is considered uncertain.

h) 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 is recorded. If the likelihood is not determinable or an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.

i) Tangible capital assets

All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. The Secretariat does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value.

Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset as follows:

Assets under construction are recorded in the applicable capital asset class in the year that they become available for use, and are not amortized until they become available for use.

j) Measurement uncertainty

The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of the assets, liabilities, revenues and expenses in the financial statements. At the time of the 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 claims incurred but not yet reported under the public service health and dental care plans, the liability for employee future benefits, and the useful life of tangible capital assets. The actual results could significantly differ from the estimated results. Management’s estimates are reviewed periodically; as adjustments become necessary, they are recorded in the financial statements in the year they become known.

a) Reconciliation of net cost of operations to current year authorities used

b) Authorities provided and used

a) Pension benefits

The Secretariat’s employees participate in the Public Service Pension Plan (the Plan), which 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 per cent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Québec Pension Plan benefits, and they are indexed to inflation.

Both the employees and the Secretariat 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 (EAP) 2012, employee contributors have been divided into two groups:

1. Group 1 relates to existing Plan members as of December 31, 2012; and
2. Group 2 relates to members joining the Plan as of January 1, 2013.

Each group has a distinct contribution rate. The 2014–15 employer expense amounts to $18.7 million ($20.4 million in 2013–14). For Group 1 members, this expense represents approximately 1.41 times (1.6 times in 2013–14) the employee contributions; for Group 2 members, it represents approximately 1.39 times (1.5 times in 2013–14) the employee contributions.

Employee contribution rates for both groups are gradually being increased to allow the employee-employer cost-sharing ratio to reach 50:50 by 2017–18.

b) Severance benefits

The Secretariat provides severance benefits to certain employee occupational groups based on eligibility, years of service and final salary. These severance benefits are not pre-funded. Benefits will be paid from future authorities. Information about the severance benefits, measured as at year ended March 31, is as follows (see also Note 2f (ii)):

Claims and litigations

Claims have been made against the Secretariat in the normal course of operations. These claims include items with pleading amounts and others for which no amount is specified. While the total amount claimed in these actions is significant, their outcomes are not determinable. The Secretariat has recorded an allowance for claims and litigations where it is likely that there will be a future payment and a reasonable estimate of the loss can be made. Claims for which the outcome is not determinable and a reasonable estimate can be made by management amount to approximately $80 million ($210 million in 2013–14) as at March 31, 2015. No accrual for these contingent liabilities has been made in these financial statements.

a) Common services provided without charge by other government departments

The Secretariat received accommodation and legal services from certain common service organizations. These services were provided without charge and have been recorded in the department’s Statement of Operations and Departmental Net Financial Position as follows:

In order to achieve efficiency and cost-effectiveness and to deliver programs economically to the public, the government has centralized some of its administrative activities. 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 these services, such as the payroll and cheque issuance services provided by Public Works and Government Services Canada and the email, network and data centre services and the workplace technology devices provided by Shared Services Canada, are not included in the Secretariat’s Statement of Operations and Departmental Net Financial Position.

b) Common services provided without charge to other government departments

The Secretariat provided services without charge to other government departments for the provision of the employer’s contribution to health, dental and other employee insurance plans and payroll benefits in the amount of $1.7 billion in 2014–15 (compared with $1.6 billion in 2013–14).

c) Other transactions with related parties

Expenses and revenues disclosed in (c) exclude common services provided without charge, which have already been disclosed in (a) and (b). The expenses are related to various goods and services and to salary transactions with other departments and agencies. The revenues are mainly related to internal support services and the recovery of public service pension administration costs.

a) Main programs

Presentation by segment is based on the Secretariat’s program alignment architecture. This presentation is based on the same accounting policies described in the summary of significant accounting policies in Note 2. The following table presents the expenses incurred and revenues generated for the main programs, by major category of expenses and revenues.

b) Government-wide funds and public service employer payments

The Government of Canada sponsors defined benefit pension plans covering most of its employees. The Secretariat also funds payments to, or in respect of, the following:

• Employer’s share of contributions to the Public Service Death Benefit Account;
• Employer’s share of Canada/Québec Pension Plan contributions and Employment Insurance premiums;
• Employer’s share of health, disability, and life insurance premiums and related Québec sales tax;
• Employer’s share of the Québec Parental Insurance Plan premium;
• Claims and related costs under the Public Service Dental Care Plan and the Pensioners’ Dental Services Plan;
• Provincial payroll taxes in respect of employees who work in the provinces of Quebec, Ontario, Manitoba and Newfoundland and Labrador. The payroll tax is levied on employers in each province to help fund their respective health plans; and
• Returns to certain employees of their share of the Employment Insurance premium reduction.

Generally, Public Service Pension Plan contributions, Public Service Death Benefit Account contributions, Canada/Québec Pension Plan contributions and Employment Insurance premiums are recovered from all departments, agencies and revolving funds based on salaries and wages incurred. Contributions to health care plans are recovered from certain departments, agencies and all revolving funds based on a percentage of salaries and wages incurred.

The following table presents a breakdown by major category.

Standing Committee on Access to Information, Privacy and Ethics:

Report 1 – Statutory Review of the Conflict of Interest Act

(adopted by the Committee on December 3, 2013; presented to the House on February 5, 2014)

Standing Committee on the Status of Women:

Report 2 – A Study on Sexual Harassment in the Federal Workplace

(adopted by the Committee on December 6, 2013; presented to the House on February 6, 2014)

Standing Committee on Government Operations and Estimates:

Report 5 – Open Data: The Way of the Future

(adopted by the Committee on June 12, 2014; presented to the House on June 16, 2014)

Standing Committee on Public Accounts:

Report 4 – Chapter 2, Access to Online Services, of the Fall 2013 Report of the Auditor General of Canada

(adopted by the Committee on March 24, 2014; presented to the House on April 9, 2014)

Standing Committee on Public Accounts:

Report 9 – Chapter 1, Public Sector Pension Plans, of the Spring 2014 Report of the Auditor General of Canada

(adopted by the Committee on June 18, 2014; presented to the House on November 19, 2014)

Senate Standing Committee on Human Rights:

Report 2 – Employment Equity in the Public Service: Staying Vigilant for Equality

(adopted by the Committee on December 10, 2013; presented to the Senate on December 10, 2013)

2014 Spring Report of the Auditor General of Canada

Chapter 1—Public Sector Pension Plans

The audit focused on the public service pension plan, the Canadian Forces pension plan, and the Royal Canadian Mounted Police (RCMP) pension plan. Together, these three plans represent 95 per cent of the government's public sector pension liability.

The objective of the audit was to examine whether the Treasury Board of Canada Secretariat (the Secretariat), the RCMP, National Defence, and the Department of Finance Canada, in keeping with their respective responsibilities, had considered the relevant information, analyses and scenarios that could affect the plans' costs and thereby impact their sustainability. The Office of the Auditor General also examined whether these entities had carried out selected key aspects of their governance and management responsibilities regarding the pension plans. Finally, the audit examined whether the information provided to stakeholders, who include taxpayers and parliamentarians, was clear and understandable.

The Secretariat received four recommendations. The Secretariat's responses can be found in this chapter's Appendix B—List of recommendations.

Chapter 2—Procuring Relocation Services

The objective of the audit was to examine whether Public Works and Government Services Canada (PWGSC), National Defence, the RCMP, and the Secretariat had fulfilled their responsibilities in awarding the 2009 contract for the Integrated Relocation Program in accordance with the Treasury Board Contracting Policy, Government Contracts Regulations, and the PWGSC Supply Manual. The audit also examined whether the decisions and actions of these organizations had facilitated access and encouraged competition.

The chapter made one recommendation in collaboration with the Secretariat; however, no management response was required.

2014 Fall Report of the Commissioner of the Environment and Sustainable Development

Chapter 5—Departmental Progress in Implementing Sustainable Development Strategies

This audit is part of the Commissioner's annual monitoring of sustainable development strategy commitments. The audit focused on commitments made in the Government of Canada's 2010 Federal Sustainable Development Strategy to strengthen consideration of the environment through the use of strategic environmental assessments.

The audit examined whether departments, the Secretariat and the Privy Council Office had the mechanisms in place to support compliance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals and related guidelines, and to ensure that environmental implications and considerations are integrated into proposals submitted to ministers, Cabinet or the Treasury Board.

The following departments were selected for the audit: Aboriginal Affairs and Northern Development Canada, Citizenship and Immigration Canada, Health Canada, Natural Resources Canada, and Transport Canada.

The Secretariat did not receive any recommendations.

2014 Fall Report of the Auditor General of Canada

Chapter 4—Providing Relocation Services

The objective of the audit was to examine whether the Canadian Armed Forces (CAF) and the RCMP had fulfilled their responsibilities in managing selected requirements of the 2009 Integrated Relocation Program contract in accordance with the relevant government authorities and terms and conditions of the contract. The audit assessed the extent to which the CAF and the RCMP had monitored the services provided under the contract and had taken corrective action, when necessary, in the areas of financial management and performance measurement.

Relocation services for federal public service employees were not included in the scope of the audit. The Office of the Auditor General did not audit PWGSC's role as contract authority, or the Secretariat's role in leading policy development and interpretation for client departments. Moving services for household goods and effects, which are provided at an additional cost under separate contracts, were also not within the scope of this audit.

The Secretariat was a third party in the audit and did not receive any recommendations.

Chapter 5—Support to the Automotive Sector

The objective of the audit was to examine whether Industry Canada, the Department of Finance Canada, and Export Development Canada, in fulfilling their respective roles and responsibilities, had managed the financial support to the automotive sector in a way that contributed to the viability of the companies and the competitiveness of this sector in Canada.

The Office of the Auditor General examined whether Industry Canada had managed the Automotive Innovation Fund in a manner that took risks into account, and had monitored and reported measurements on the results against the program's objectives.

The Secretariat was a third party in the audit and did not receive any recommendations.

Chapter 7—Documentary Heritage of the Government of Canada—Library and Archives Canada

The objective of the audit was to examine whether Library and Archives Canada had fulfilled its responsibilities for acquiring and preserving government documentary heritage from federal institutions, and for facilitating access to these records for current and future generations.

The following five government institutions were consulted as part of the audit: Employment and Social Development Canada, Parks Canada, the National Film Board, Natural Resources Canada, and the Truth and Reconciliation Commission of Canada.

The Secretariat was a third party in the audit and did not receive any recommendations.

2.1 Internal Control Management

The Secretariat 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 the department's Financial Management and Internal Control Framework, approved by the Secretary, and includes the following:

• 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;
• A Values and Ethics Office, which provides educational and awareness programs and has developed a departmental code of conduct;
• Ongoing communication and training on the legislative and policy requirements for sound financial management and control;
• A group dedicated to ICFR under the direction of the Chief Financial Officer, with a primary focus on maintaining internal control documentation and conducting assessments to support management and oversight of the system of ICFR; and
• Monitoring of, and regular updates on, internal control management, as well as provision of related assessment results and action plans to the Secretary, departmental senior management and the Secretariat's Government of Canada Audit Committee (GCAC).

The GCAC is an independent and objective advisory committee to the Secretary. Its responsibilities include providing advice to the Secretary on the Secretariat's systems of internal control, financial reporting and financial disclosures. It also provides advice, as applicable, on risk-based assessment plans and associated results regarding the effectiveness of the departmental system of ICFR.

The GCAC comprises the Secretary, the Associate Secretary and three members who are external to the federal public administration. An external member chairs the committee. Given the independent nature of the Committee, it plays an essential role in ensuring the integrity of corporate reporting as well as providing an objective and broader perspective on risks and controls. For example, the Committee reviewed and provided comments regarding the Secretariat's Departmental Performance Report and Corporate Risk Profile, as well as risk-based internal audit plans and engagement reports that provide assurance over the adequacy of controls. The Secretariat's Chief Financial Officer and the Chief Audit Executive, as well as the Comptroller General of Canada, attend all meetings of the GCAC. The GCAC meets at least four times a year and may convene for additional meetings as required.

2.2 Service Arrangements Relevant to Financial Statements

3.1 Design Effectiveness Testing of Key Controls

At the end of 2014–15, the Secretariat completed the remediation actions resulting from prior years' assessments of business processes controls for the pension and benefit plans, with the exception of one design gap relating to the employer's contribution paid with respect to employee's benefit plans and for which further work is required. The outstanding issue is in relation to the need for enhanced supporting documentation for those payments made through interdepartmental settlements and for which the Secretariat must rely on controls performed by other government departments. Additional consultation is required with internal and external stakeholders to define the supporting documentation requirements that will meet departmental needs of assurance over the approval of those types of payments, as well as financial management policy expectations.

Results of the design effectiveness testing of the capital assets process conducted in 2014–15 indicated that there was a need to review and update the Secretariat's policy on capital assets to better clarify which items are to be capitalized and which are to be expensed. In addition, the policy should be approved in accordance with the Secretariat's policy approval process.

3.2 Operating Effectiveness Testing of Key Controls

3.3 Ongoing Monitoring of Key Controls

The Secretariat's Internal Audit and Evaluation Bureau (IAEB) assesses the effectiveness and efficiency of the Secretariat's internal control system through the conduct of periodic audits and reviews of different areas of the Secretariat's operations. Some IAEB and Internal Control Unit activities are complementary. In these cases, both groups work together to ensure alignment of complementary activities to maximize results.

In 2014­–15, IAEB completed the review of the Secretariat's internal governance framework and concluded that the governance structure is well articulated, mature and flexible. However, areas of improvement were identified to break down silos across the Secretariat and allow broader-based input to operational decision making. Implementation of recommendations is underway. This review is in relation to entity-level controls.

In 2014–15, the Secretariat's Internal Control Unit undertook ongoing monitoring activities that were focused mainly on following up on the few remaining remediation actions from previous years' assessments of IT general controls. This follow-up is in relation to actions outstanding from the review conducted by the Integrated Financial and Materiel System Program Office in 2012–13.

The Secretariat plans an external assessment of its IT general controls on a regular basis to provide the level of assurance required to meet interdepartmental service arrangements with the clients of the Secretariat's financial system cluster. The Secretariat has contracted EY to perform a first external assessment of the IT general controls beginning in 2015–16.

In addition, in the fourth quarter of fiscal year 2015–16, the Secretariat will conduct an external review of SAP financial system by the Integrated Financial and Material System Program Office. This review will also be planned to occur every three years.

4.1 Progress in Fiscal Year 2014–15

The Secretariat continued its progress in completing its assessments according to approved plans and in following up on remediation actions. Table 1 provides a summary of this progress.

4.2 Status and Action Plan for the Next Fiscal Year and Subsequent Years

The Secretariat has continued to make significant efforts to meet its target for completing design and operating effectiveness testing across all control areas, including entity level controls, IT general controls and process level controls.

At the end of 2014–15, design effectiveness testing was completed for all control areas, with a few remaining remediation actions to be completed. Building on progress to date, the Secretariat is positioned to complete operating effectiveness testing of the remaining processes and reach the ongoing monitoring stage by 2015–16 for the majority of its 21 processes that are subject to internal control assessment. At that time, the Secretariat will apply its rotational ongoing monitoring plan to reassess control performance on a risk basis across all areas. The status and action plan for the completion of the identified control areas for the next fiscal year and subsequent years is outlined in Table 2.