Annex - Assessment of Internal Control Over Financial Reporting
For the year ended March 31, 2014
This document provides summary information on the measures taken by the Department of Justice (the Department) to maintain an effective system of internal control over financial reporting (ICFR), including information on internal control management, assessment results and related action plans.
2. Departmental system of internal control over financial reporting
2.1 Internal control management
The Department has a well-established governance and accountability structure to support departmental assessment efforts and oversight of its system of internal control. A departmental internal control management framework, approved by the Deputy Minister, 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;
- On-going communication and training on statutory requirements, and policies and procedures for sound financial management and control; and
- At least semi-annual monitoring of and regular updates on internal control management, as well as the provision of related assessment results and action plans to the Deputy Minister, departmental senior management, and the Departmental Audit Committee.
The Departmental Audit Committee provides advice to the Deputy Minister on the adequacy and functioning of the Department's risk management, control and governance frameworks and processes.
2.2 Service arrangements relevant to financial statements
The Department relies on other organizations for the processing of certain transactions that are recorded in its financial statements as follows:
Common Arrangements within the Government of Canada
Public Works and Government Services Canada centrally administers the payments of salaries and the procurement of goods and services in accordance with the Department’s delegation of authority, and provides accommodation services.
- Treasury Board of Canada Secretariat provides the Department with information used to calculate various accruals and allowances, such as the accrued severance liability.
- Shared Services Canada provides information technology (IT) infrastructure services to the Department in the areas of data centre and network services. The scope and responsibilities are addressed in the interdepartmental arrangement between Shared Services Canada and the Department.
Specific Arrangement for the Department of Justice
- Public Prosecution Service of Canada provides certain corporate (internal) services for the Department’s Northern Region. The provision of these services ended on September 30, 2013.
Other organizations also rely on the Department of Justice as follows:
- The Department is the common service provider of legal services to federal departments and agencies, and as such, the Department charges these organizations with the cost of providing legal services pursuant to legal services agreements, and provides an annual dollar figure for those legal services it provides without charge.
- The Department provides information on pending litigation cases in order to assist federal departments and agencies in the reporting of contingencies.
- The Department provides certain corporate (internal) services to the Public Prosecution Service of Canada.
- The Department assists provinces and territories in the enforcement of family support orders and agreements by providing garnishment assistance through the interception of designated federal moneys payable to individuals owing family financial support.
3. Departmental assessment results during fiscal year 2013-14
The key findings and significant adjustments required from the current year’s assessment activities are summarized below.
New or significantly amended key controls
The prior year (2012-13) assessment of key controls in the re-engineered end-to-end processes for legal services revenues continued. Opportunities to further strengthen specific key controls were identified. Significant adjustments were not required for the new key controls that were assessed.
New key controls were implemented for leave.
On-going monitoring program
As part of its rotational on-going monitoring plan, the Department completed its 2013-14 planned assessment of entity level controls, IT general controls, and of the key financial controls for the Family Law liability, salaries and employee benefits expense, professional and special services expense, legal services revenue, transfer payments, travel and relocation expense, tangible capital assets, and accounts payable and accrued liabilities financial statement accounts. For the most part, the key controls that were tested performed as intended, with remediation required as follows:
- The Travel, Hospitality and Conferences internal audit identified opportunities to further strengthen the design of key controls and weaknesses in the operating of specific key controls.
- An opportunity to strengthen the approval processes for payables at year-end transactions was also identified through the on-going monitoring program.
Management action plans addressing the recommendations have been developed by the process owners.
4. Departmental action plan
4.1 Progress during fiscal year 2013-14
The Department continued to conduct its on-going monitoring according to the previous fiscal year’s rotational plan as shown in the following table.
|Rotational on-going monitoring plan for current year||Status|
||Completed as planned; no remedial actions required.|
||Completed as planned; remedial actions started.|
In 2013-14, the Department conducted the following work in addition to the progress made in on-going monitoring:
- Leave was reviewed.
4.2 Action plan for the next fiscal year and subsequent years
The Department’s rotational on-going monitoring plan over the next three years, based on an annual validation of the high risk processes and controls and related adjustments to the on-going monitoring plan as required, is shown in the following table.
|Key control area||Operating effectiveness testing rotation|
|Entity level controls||Table note X||Table note X||Table note X|
|IT General controls under departmental management||Table note X||Table note X||Table note X|
|Process level controls
The on-going monitoring schedule for specific financial statement accounts is outlined below.
|Family Law account (Liability)||Table note X||Table note X||Table note X|
|Salaries and employee benefits (Expense)||Table note X||Table note X||Table note X|
|Professional and special services (Expense)||Table note X||Table note X||Table note X|
|Legal services revenue||Table note X||Table note X||Table note X|
|Transfer payments||Table note X||Table note X||Table note X|
|Travel and relocation (Expense)||Table note X|
|Tangible capital assets||Table note X|
|Accounts payable and accrued liabilities||Table note X|
|Receivables and advances||Table note X||Table note X|
|Family Law fees (Revenue)||Table note X||Table note X|
- Table note X
An X signifies that the level of control, or the key controls for a financial statement account, will be monitored in the specified fiscal year.
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