Office of the Commissioner of Lobbying of Canada

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Audit and Evaluation Committee Annual Report 2022-23

Table of contents

Introduction

The Office of the Commissioner of Lobbying (OCL) is an independent Agent of Parliament. The Commissioner of Lobbying (Commissioner) is the deputy head of the organization.

The Financial Administration Act requires that deputy heads establish an audit committee for their departments. The Treasury Board (TB) Policy on Internal Audit and Directive on Internal Audit expand on the legislation, requiring the establishment of a Departmental Audit Committee (DAC) that includes a majority of members from outside the federal public service (external members).

Audit and evaluation are the subjects of separate policies in the federal government. However, the management of these functions is closely linked, particularly in small agencies. In the interest of efficiency, the Commissioner has established an Audit and Evaluation Committee (AEC) that in addition to responsibilities mandated for a DAC, has responsibilities related to evaluations that are carried out under the TB Policy on Results.

The Terms of Reference (TOR) for the AEC requires that the Committee prepare a report on its activities annually and submit it to the Commissioner. This document fulfils that requirement.

Relevant legislation and related policies

The AEC TOR supports the application of the Financial Administration Act as well as related Treasury Board policies and Directives. Details, including application to OCL as an Agent of Parliament, are set out in the TOR.

Accountability of the AEC

The sole accountability of the AEC is to the Commissioner. In this regard, members are accountable for the objectivity, quality and timeliness of their advice and for the performance of their contractual responsibilities.

Responsibilities of the AEC

The AEC is responsible for the following:

  • Providing objective advice and recommendations to the Commissioner regarding the sufficiency, quality and results of internal audit engagements that are related to the adequacy and functioning of the Office's frameworks and processes for risk management, control and governance.
  • Using a risk-based approach, reviewing all areas of management set out in the AEC TOR for committee review. These areas are listed in the next section of this document.
  • Providing advice and recommendations on matters for which the Commissioner, as accounting officer, is responsible, and on other related matters as needed or requested by the Commissioner.
  • To provide advice and recommendations to the Commissioner on the selection of areas for evaluation and on the scope, conduct and results of those evaluations.

Areas of management for AEC review

The areas of management that fall within the scope of the AEC are:

  • Audits and Evaluations
  • Values and Ethics
  • Risk Management
  • Management Control Framework
  • Internal Audit Function
  • Follow-up on Management Action Plans, including those made in response to audits by the Office of the Auditor General or the Public Service Commission
  • Financial Statements and Public Accounts Reporting
  • Accountability Reporting

Membership

The Chair and other external members are selected by the Commissioner. The FY 2022-23 AEC consisted of:

Chair:

Michael Nelson, External member

Members:

Nancy Bélanger, Commissioner, Ex-Officio member

Basia Ruta, External member

Regular Non-member attendees

Charles Dutrisac, Chief Audit Executive, Director of Finance and Chief Financial Officer (CAE/CFO)

Meetings

Regular Meetings

During FY 2022-23 regular meetings of the Committee took place on:

June 28, 2022

September 29, 2022

December 8, 2022

February 23, 2023

Ad Hoc Meetings

Ad hoc meetings and discussions between the Commissioner and AEC members were held throughout the FY as required. During FY 2022/23 the following ad hoc meetings were held:

April 6, 2022 (AEC Going Forward)

May 9, 2022 (AEC Retreat Strategy)

May 20, 2022 (AEC Retreat)

August 16, 2022 (Review draft Financial Statements)

September 15, 2022 (ICFR/Financial Statements, Accounting Policies)

October 17, 2022 (Review of DRR)

January 13, 2023 (Financial Reporting Framework)

March 29, 2023 (ICFR/ICFM, RBAEP)

Other Meetings

External members held discussions between meetings, usually via Zoom or Microsoft Teams, with each other, the Commissioner, and/or the CAE/CFO as required. Meetings with OCL Directors were held to inform external members about current operational matters within individual directorates.

Summary of FY 2022-23 AEC meeting items

A draft Annual Plan for the AEC was prepared by the Chair and was discussed and approved by the AEC. Items were included in the Plan for either a decision, advice to the Commissioner or for the information of external members.

A version of the Annual Plan that includes the end-FY status of items (i.e. completed or not) is attached to this report. All planned items were completed, with the exception of a review of the OCL Audit Policy. OCL follows the TB Audit Policy, however, in reviewing this omission, members agreed that on an annual basis, it was important that the AEC review the TB policy to ensure that they and OCL are aware of any changes to the TB policy.

Agendas for AEC meetings were planned by the Chair and the CAE in accordance with the Plan. Items discussed at regular and ad hoc meetings of the AEC in FY 2022-23 included the following:

Internal Audits, Evaluations, and related engagements

Two engagements were included in the RBAEP that was approved by the Commissioner in February 2022. Those planned engagements will continue into FY 2023-24 for the reasons elaborated below:

Audit/Ongoing Reviews of ICFR/ICFM The first step needed for this engagement was to update and document all financial systems given new financial management policy requirements and changes to financial practices triggered by the hybrid work environment during the pandemic. In addition, there were modifications with service provider arrangements for the OCL for certain financial management, reporting and related controls. Bringing all systems documentation up to date and aligned with new policy requirements in a comprehensive and systematic manner, along with walkthroughs, represented the first leg of work in this area. The work was carried out by an external consultant and was completed in FY 2022-23. The next stage of work is to institute systematic monitoring of key internal controls over financial management including the internal controls over financial reporting (a subset of ICFM). At an ad hoc AEC meeting on March 29, 2023, it was agreed that the next stage of the examination, which includes monitoring of processes to assess their ongoing effectiveness, will commence in FY 2023-24. Where merited, full audits of ICFM components will be carried out in future years.

Scoping of an audit or evaluation of the OCL Compliance Function During FY 2022-23, discussions took place at AEC meetings regarding the scope of an engagement to examine the Compliance Function at OCL, which is due for an audit, evaluation or some other form of review. At the ad hoc AEC meeting on March 29, 2023, it was agreed that an external resource would be hired to draft a Statement of Work (SOW) for this engagement for discussion with the AEC and approval by the Commissioner. The engagement is expected to begin in FY 2023-24.

AEC Meeting Structure

At an ad hoc meeting in April, 2022, the Commissioner and external members discussed how AEC meetings could be structured to cover the most important issues to OCL and to ensure that sufficient time was allowed to provide advice to the Commissioner. A meeting on the same topic was held with the CAE. The following changes were agreed and were implemented during the reporting period:

  • A more rigorous planning regime for AEC meetings would be introduced
  • Financial, audit and evaluation items would be given priority in the morning of each regular meeting. This time would normally include the in camera with the CFO/CAE.
  • Afternoons of each meeting would normally be devoted to a meeting of the external members with the Commissioner, including her update to the AEC on OCL operational matters.

Financial Reporting Framework

At an ad hoc meeting in January, 2023, the CFO and financial staff of the Canadian Human Rights Commission (CHRC) provided a briefing to AEC members on the financial reporting documents that are brought forward to the AEC during the FY. This included the Departmental Plan, the Departmental Results Report, Quarterly Financial Reports and the Main Estimates documents. The aim of the session was to assist AEC members in making linkages among the financial numbers presented in these documents. Members appreciated the briefing and will look forward to using the information provided as documents are discussed at AEC meetings going forward.

OAG Audit of Financial Statements

OCL Financial Statements are audited each year by the OAG. The AEC reviewed the Financial Statements prior to meeting with the OAG. Riowen Abgrall, Audit Principal and Julie Tremblay, Director, presented the results of the audit of FY 2021-22 to the Committee on September 29, 2022. Ms. Tremblay advised that the results of the audit resulted in an unmodified opinion on the financial statements. A management letter was not issued. OAG officials confirmed that the audit had gone well and thanked officials of OCL and the financial services provider, CHRC, for their full cooperation. On the recommendation of the AEC, the Commissioner and the CFO signed the audited financial statements.

OCL Budget/Quarterly Financial Reporting/New Funding

The AEC reviewed and provided comments on Quarterly Financial statements for Q1, Q2 and Q3. At every meeting, members were presented with a report and analysis by the CFO on expenditures and forecasts. The Commissioner was successful in obtaining funding in Budget 2023 for increased staffing to alleviate capacity shortfalls that had been identified in the OCL Corporate Risk Profile. AEC members were informed of progress on obtaining this funding via a TB Submission.

Departmental Plan (DP) and Departmental Results Report (DRR)

The AEC was provided with drafts of the DP and DRR for review in advance of their finalization. Comments were made and where required, discussions with the Commissioner and CFO took place.

Corporate Risk Profile (CRP) and Risk-Based Audit and Evaluation Plan (RBAEP)

OCL undertook a comprehensive review of the CRP and RBAEP in FY 2021-22. In view of this work, the AEC agreed in February 2022 that only minor changes to the CRP would be required in FY 2022-23.

Human Resources

At each meeting the Commissioner and where appropriate, the Executive Director of Corporate Services, briefed the AEC on OCL staffing issues. These included:

  • Hybrid Work Model – The AEC was kept informed of the progress on movement to a hybrid work model, as well as measures taken by OCL management to promote mental health wellness and support productivity of staff.
  • Staffing of vacant and newly funded positions – The AEC was briefed at every meeting on progress to fill vacant positions and positions funded in Budget 2021. As well, the AEC was briefed on progress to obtain the funding for new positions that was provided in Budget 2023.
  • Staffing of the CFO/CAE position – The AEC was informed at every meeting on progress to staff CFO/CAE position in advance of the planned retirement of the current CFO/CAE in Fiscal Year 2023-2024.

Parliamentary Affairs

The AEC was informed at regular meetings and on an ad hoc basis regarding appearances before Parliamentary Committees.

Consultations on the Lobbyists’ Code of Conduct (Code)

During the reporting period, the Commissioner held public consultations on revising the Code. The AEC was briefed at each regular meeting on the progress of this consultation, including the referral to the ETHI Committee.

Legal Issues

During the reporting period, there were no cases that posed a potential financial risk to OCL.

Ongoing Operational Matters

At regular meetings and when appropriate at ad hoc meetings, the AEC was informed of the status of operational matters that arose during the reporting period. Members appreciated this information, as it provided context for their advice to the Commissioner. Items included the following:

  • IT security and physical security
  • Performance of organizations that provide services to OCL through MOUs.
  • Central agency reporting burden and its impact on staff workload
  • OCG Guidance on ICFM for Small Departments and Agencies

Orientation and learning activities

Members of the Committee attended the virtual DAC symposium that was hosted by the Office of the Comptroller General in November, 2022. Key topics discussed at the symposium included the future landscape of work, the changing nature of risk management and mitigation given the current environment, and the current and emerging threats regarding cybersecurity.

Assessment of OCL’s system of internal controls, risk management and governance processes

As described earlier in this report, the AEC met as a full committee with the Commissioner and OCL staff (primarily the CAE/CFO) several times during the year, including ad-hoc meetings and discussions as required. At these meetings, the functioning of internal controls, risk management and governance processes were discussed. In addition, to increase the reliability of the advice provided by the AEC to the Commissioner, the following steps were taken:

  • At each regular AEC meeting the Commissioner and CAE/CFO were asked whether there were any irregularities, including fraud or management override, that they wished to disclose. There were none.
  • At or near each regular AEC meeting, the external members held in-camera sessions with the CAE/CFO and the Commissioner, providing a further opportunity to raise any issues of concern
  • During the reporting period, the Chair was in regular contact with the Commissioner and the CAE/CFO
  • OCL’s Quarterly Financial Statements were reviewed by external members before they were published. Questions were asked of the CFO – and satisfactory answers were provided – at each of these reviews.
  • External members met in-camera with the OAG Principal responsible for the audit of OCL’s FY 2021-22financial statements. It was noted that the audit did not identify any material misstatements or concerns that needed to be brought to the attention of the AEC. In addition, the OAG was supportive of the changes to accounting policies to recognize certain expenditures as physical assets when they exceed a certain dollar threshold. Those accounting policies were applied for that year and forward.
  • Every year, throughout the fiscal year, another government department that is a service provider in financial management to the OCL, carries out systematic independent reviews of compliance with basic FAA authorities for all expenditures. Results of these reviews are presented to the AEC for discussion, oversight and recommendation on actions as appropriate to the Commissioner. Although fraud is not assessed as a high risk at OCL, it is always top of mind for the Commissioner, her management team and AEC members. To assist in assurance against fraud, the AEC has requested an annual report on measures that OCL takes to prevent fraud. Beginning in FY 2023-24 this report will be tabled at the AEC meeting that takes place in the Jan-Mar period.
  • Further, as noted earlier in this report, the OCL has updated its control systems and practices to align with new TB requirements (those that apply to OCL as an independent Agent of Parliament) and is committed to a robust cyclical approach to monitoring and audit of ICFM/ICFR processes beginning in FY 2023-24.

Assessment of the capacity and performance of the OCL’s internal audit and evaluation function

Given its staff size and budget, the OCL does not have an in-house audit or evaluation team. Audits, evaluations, and related reviews are carried out by external consultants under the direction of the CAE.

The AEC noted that to support this arrangement of carrying out the OCL’s audit and evaluation responsibilities:

  • The AEC meets on a regular and ad hoc basis, has an external Chair, and membership is reviewed and renewed on a timely basis.
  • OAG undertakes an audit of OCL Financial Statements every year.
  • A multi-year risk-based audit and evaluation plan has been prepared and has been reviewed by the AEC.
  • Sufficient funds are available to carry out this plan.

In view of these observations and its ongoing work with the Commissioner and the CAE/CFO, the AEC’s advice to the Commissioner is that the capacity and performance of the OCL’s internal audit and evaluation are sound. The increased emphasis that began this FY on ICFM processes and will continue going forward, will reinforce the AEC’s confidence in this regard.

Support to the committee

The AEC received information and support from management to enable it to carry out its duties. In particular:

  • Meeting agendas were discussed with the Chair in advance of each regular meeting
  • Minutes were taken at regular meetings and were provided to AEC members for review in a timely manner
  • Arrangements for virtual meetings, when required, worked well, allowing for efficient and effective discussions despite the inability to meet in person
  • Contract support for external members was carried out effectively, including renewals and amendments

AEC forward agenda

Certain AEC activities take place each year, including the following:

  • Providing advice and recommendations to the Commissioner on issues related to delivery of services, including performance measurement and communication with stakeholders
  • Reviewing audit and evaluation reports
  • Follow up of Management Action Plans
  • As a committee, developing a better understanding of both the administration and the business of OCL through briefings by appropriate OCL staff. These briefings help Committee members to provide advice regarding risks.
  • Review of Quarterly Financial Statements and provision of comments where appropriate on the Departmental Plan and the Departmental Results Report
  • Review and recommendation of approval to the Commissioner of the Statement of Management Responsibility and ICFM/ICFR in OCL’s financial reporting package
  • Participating where appropriate in DAC community learning events in order to exchange views with audit committee members in other departments and agencies
  • Other activities, as set out in the AEC Annual Plan

In addition to these regular activities, the external members of the AEC will have a special interest in the following issues during 2023-24:

  • Implementation of the RBAEP – Central to the work of the AEC is provision of advice on audits, evaluations, and reviews such as Advisory Projects. The work on ICFM planned for FY 2023/24 and the years going forward will be of particular importance in providing assurance to the Commissioner.
  • Integration of new OCL Staff – Budgets 2021 and 2023 provided OCL with funding for several new positions. As well, normal staff turnover will require the filling of positions. The AEC will look forward to hearing about progress on integration of these new staff and the work they will carry out in support of OCL’s mandate.
  • Ongoing transformation of post-pandemic OCL work practices – OCL was extremely successful in mitigating the risks and challenges associated with working remotely during the pandemic. Going forward, as practices for remote work vary across government, OCL will need to continue adapting to the expectations of stakeholders and OCL staff and management.
  • Cybersecurity – The federal government continues to place an emphasis on assessing and mitigating the threats to its systems that occur in the cybersecurity domain. Although OCL is a small organization, the Lobbyists Registration System (LRS) is a public-facing system and is mission critical for OCL. Through the Corporate Risk Profile and RBAEP process, the AEC will continue to monitor the cybersecurity risks to OCL.
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