Annex to the Statement of Management Responsibility including Internal Control over Financial Reporting of the Public Service Commission of Canada for the 2023-24 Fiscal Year (Unaudited)

1. Introduction

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

Detailed information on the PSC’s authority, mandate and core responsibilities can be found in the PSC’s 2023-24 Departmental Plan and 2023-24 Departmental Results Report.

2. Departmental system of internal control over financial reporting

2.1 Internal control management

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

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

The Internal Audit Committee is an independent advisory committee to the President. It is responsible to provide advice to the President on the adequacy and functioning of the PSC’s risk management, control and governance frameworks and processes.

2.2 Service arrangements relevant to financial statements

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

2.2.1 Common service arrangements

• Public Services and Procurement Canada administers the payment of salaries, the procurement of goods and services that exceed the PSC’s delegated contracting authority, and provides accommodation services
• Treasury Board of Canada Secretariat provides information on public service insurance and centrally administers payment of the employer’s share of contributions toward statutory employee benefit plans
• Department of Justice Canada provides legal services
• Shared Services Canada provides information technology infrastructure services

Readers of this annex may refer to the annexes of the above-noted departments for a greater understanding of the systems of internal control over financial reporting related to these specific services.

The PSC relies on one other department for the processing of certain information or transactions that are recorded in its financial statements, as follows:

2.2.2 Specific arrangements

• Public Services and Procurement Canada provides the PSC with support and maintenance of the MyGCHR application.

3. Public Service Commission of Canada assessment results for the 2023-24 fiscal year

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

The key findings and significant adjustments required from the current year’s assessment activities are summarized in the following sub-sections.

3.1 Ongoing monitoring program

As part of its rotational ongoing monitoring plan, the PSC completed the assessment of the payroll business process. Testing was performed to assess the operating effectiveness of key controls that should be in place. In most cases, the key controls tested worked as intended and no significant control issues were found. For areas identified for improvement, corrective actions will be implemented in 2024-25 and continue to be monitored in future years.

Supplementary targeted testing was performed to assess specific payroll key controls such as the Section 32 of the Financial Administration Act. No control issues were found.

The review of documentation, design and operational effectiveness of the Expenses and Accounts Payable and Capital Assets processes started in 2023-24. The related testing will be conducted in 2024-25 to complete the full assessment which will include the recommended approach for government contracting provided by the Office of the Comptroller General’s Internal Audit Sector.

On an ongoing basis, the PSC will continue to monitor changes to its internal control business processes to identify any new risks or areas for improvement.

3.2 Areas for improvement

• Payroll process: Observations were made on the need to strengthen the effectiveness of controls by ensuring the use and adherence to existing procedures and related documentation as well as updating them on an ongoing basis.

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

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

Note 1: The PSC will conduct targeted testing for the payroll process from 2024-25 to 2027-28 as required to assess the improvements related to recommendations provided in previous internal control action plans. Targeted testing will also be conducted for any changes to this business process resulting from recommendations made by the Government of Canada’s HR-to-Pay Integrated Team/TBS-Office of the Chief Human Resources Officer guidance to improve HR and Pay.