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2016–2017 AEC annual report to the Commissioner of lobbying

Table of contents


Introduction

The Audit and Evaluation Committee (AEC) is accountable to the Commissioner.

Pursuant to Section 8 of its Terms of reference, the Committee must prepare an annual report to the Commissioner. The purpose of the annual report of the Audit and Evaluation Committee is to:

  • summarize the Committee's activities undertaken and the results of its review;
  • provide the Committee's assessment of the Office's system of internal controls;
  • highlight significant concerns the Committee may have in relation to the risk management, controls and governance framework and processes of the Office;
  • provide the Committee's assessment of the capacity and performance of the Internal Audit function and progress regarding program evaluation and performance measurement;
  • provide, as needed, recommendations for the improvement of risk management, controls and governance framework and processes, including recommendations for the improvement of the Internal Audit function of the Office; and
  • provide such other information or documentation that the Committee deems important to best convey a fair and complete picture of its activity and results – and the context within which this ought to be viewed (e.g., the committee includes its Terms of reference as an appendix to its annual report).

In addition, Section 8 of its Terms of reference states that the Committee is to fully brief the Commissioner in advance of the finalization of the annual report of the Committee.

Purpose

The Committee is an advisory body to the Commissioner. It provides the Commissioner with independent, objective guidance, advice and assurance regarding risk management, the control framework, audit, evaluation, performance measurement and reporting practices.

The work of the Committee is informed by the Treasury Board Secretariat (TBS) / Office of the Comptroller General (OCG) policies in these areas. The Committee carries out its responsibilities through the thoughtful and rigorous implementation of its Terms of reference.

Committee

The Audit and Evaluation Committee of the Office of the Commissioner of Lobbying (OCL) consists of three external members and the Commissioner, as an ex-officio member. The three external members are: Mr. Thomas K. Gussman, MA, C.E., Mr. Michael J. McLaughlin, FCPA, FCMA, and Mr. Alan Winberg, Ph.D., C.E.

Qualifications of members

The collective skills, knowledge and experience of the AEC members are such that the Committee is able to competently and effectively undertake its duties. The Members of the AEC are independent and free of any real or perceived conflict of interest.

The Members have committed to participating in workshops, courses and training offered by the TBS – OCG for Members of Departmental Audit Committees. The members of the AEC have participated in these OCG-organized events, such as the workshops offered by the OCG, the annual meeting of Chairs with the Comptroller General and the OCG Annual Symposium for Members of Departmental Audit Committees. In addition, the Commissioner and the Deputy Commissioner have participated in several of these events. As a result of our participation in these courses and events, the members of the OCL AEC are well-aware of the Treasury Board (TB) Policy on Internal Audit and the OCG guidance for members of these Committees, and best practices in use in federal departments and agencies. One member of the Committee is a member of the Institute of Internal Auditors. Two members of the Committee have been awarded the Credentialed Evaluator certification by the Canadian Evaluation Society and attend various professional events organized by the Canadian Evaluation Society related to the TB Evaluation Policy Suite. A third member is a Chartered Professional Accountant and has expert knowledge with regard to Performance Audits, attending workshops and contributing to studies on advancing Performance Auditing in the public sector.

Meetings held

Pursuant to its Terms of reference and the guidance issued by the OCG, AEC meets in regular sessions, as well as in-camera. In the fiscal year beginning April 1, 2016 and ending March 31, 2017, the AEC met in a regular session June 7 & 8, 2016; September 20, 2016; December 20, 2016; and March 21, 2017. An in–camera meeting of AEC was held the day before each of these regular meetings and/or at the conclusion of each regular meeting. External members and the Commissioner were present during all of these regular meetings and in-camera meetings. Members met with officials of Office of the Auditor General (OAG) on July 11, 2016, to review and discuss the results of their annual audit of the OCL financial statements. 

Responsibilities and duties

Terms of reference: The AEC Terms of reference identify the roles and responsibilities of the Committee. Pursuant to the Terms of reference, it is our plan that these Terms of reference be reviewed at one or more of our meetings each year, and reconfirmed by the Commissioner at that time. The last time the AEC Terms of reference were reviewed was June 7, 2016. At that time the Terms of reference were confirmed with several minor changes. 

Our Committee continues to use the Treasury Board mandated areas of responsibility for audit committees (as listed in the Treasury Board Directive on Internal Auditing in the Government of Canada) and the key elements of the Treasury Board Policy on Results (Policy Suite) to organize our plan of activities.  TBS / OCG issued additional guidance regarding Audit Committees and renewed documentation regarding results, evaluation, and performance measurement during fiscal year 2016-17. The Committee has reviewed and discussed the available documentation from TBS regarding these matters. Our ongoing oversight of these areas of responsibility through review of documentation and participation in meetings over the course of the year provides us with the information necessary to provide advice to the Commissioner with regard to the core areas of management, internal audit, results, program evaluation, performance measurement, control and accountability.

Orientation to the work of the Office: The Committee received a thorough orientation to all areas of the operations within the Office of the Commissioner of Lobbying at its first set of meetings after the Committee was formed. There has been no change to the membership of the Committee over time. Over the years since March 2009, in the course of attending meetings of this Committee, reviewing OCL documentation and operations, and providing advice to the Commissioner, external members have acquired a deep knowledge and understanding with respect to the issues facing OCL. In view of the ongoing meetings and deliberations of the Committee, all members of AEC feel that they have a very good general knowledge of the operations of the Office, the overall workplace environment, the key public policy issues related to the Lobbying Act, and the key risks and day-to-day risk mitigation strategies in place in the Office.

AEC annual plan: The Chair presented a set of dates for meetings planned over the next fiscal year and a planned agenda for each of those meetings, based on the agendas we have used in past years. Four meetings are expected to be held over the next twelve months, covering the areas of responsibility set out in the Terms of reference. The Committee has the practice of confirming the dates of each of our meetings 12 months into the future. This forward planning has worked quite well to date. 

The dates planned for our meetings in the coming year are: June 5 (in-camera), June 6 & 7, 2017; (July 11 with the OAG to review the results of their annual audit); September 18 (in-camera), September 19, 2017; January 10 (in-camera), January 11, 2018; April 9, 2018 (in-camera), and, April 10, 2018.

AEC Self-Assessment: Pursuant to our Terms of reference and consistent with guidelines issued by the OCG, each year we are planning to undertake a self-assessment at our meeting in March. We completed our 2016-2017 self-assessment March 21, 2017. As set out in the Committee's Terms of reference, we have adopted the practice of reporting the results of this self-assessment in a confidential report to the Commissioner.

Areas for review, discussion and provision of advice

The Office was created on July 2, 2008, with the coming into force of the Lobbying Act. Before this date, the Office of the Commissioner did not exist, and the previous organization, the former Office of the Registrar of Lobbying, was considered a small agency. As such, some of the requirements contained in Treasury Board policies, for example, the TB Policy on Internal Audit, did not apply. Since July 2008, the deputy head is an Agent of Parliament and, therefore, for the purpose of these policies, the Office is treated in the same manner as a large department and must put in place a number of initiatives. Our work over the past year noted the continued steady progress in implementing these requirements.

Over the past 12 months, we have reviewed the progress of the OCL, as an independent Agent of Parliament, in continuing to: adjust its ongoing organizational structure; build relationships with external service providers, including a new hosting arrangement for the Registry of Lobbyists with the Office of an independent Agent of Parliament; staff key positions; and, prepare management policies and plans.

The Commissioner’s term has been extended to allow additional time for the appointment of her successor. The past 12 months have included making preparations for a new Commissioner. In order to provide continuity and make advice from the AEC available to a new Commissioner, the terms of the Members of AEC have been extended with staggered end dates. This is intended to provide time to make new appointments of external members for the continuing operations of AEC.

Looking back over the term of the Commissioner, the OCL has made steady and observable progress in putting into place an effective organizational structure and controls. The Office has completed a set of internal audits, including: completion of an internal audit of key financial controls; an internal audit of the Lobbyists Registration System; an internal audit of procurement and contracting. The Office has: prepared and kept up-to-date a well-documented Corporate Risk Profile and Risk Management Plans; prepared a multi-year Internal Audit Plan; completed annual OAG audits of its financial statements; completed a Strategic Operating Review in order to implement a 5% reduction in the OCL's budget; completed a set of key financial and management policies; documented its set of internal controls; prepared and kept up-to-date an integrated business plan for the Office; implemented a Performance Measurement Strategy, including a logic model, performance indicators and targets; and competed an Action Plan to implement all responses to an external audit in 2015-16 by the Public Service Commission (PSC) of OCL staffing. Over the past fiscal year, the Office has measured its performance against its service standards.  

At our regular and our in-camera meetings over the past year, we have reviewed documentation and had discussions to consider:

  • the Office's control environment and system of internal controls, including the implementation of the management responses to the recommendations of completed internal audits and an external audit by the PSC;
  • values and ethics and the workplace environment;
  • the Office's risk management, Internal Audit, performance measurement, results reporting and accountability processes;
  • the Office's plans and framework for its Performance Measurement System and Results / Program Evaluation function;
  • the capacity and performance of the Internal Audit function;
  • the Office's steps to maintain and build its relationship with the OAG, including the completion of the regular, annual OAG audit of the OCL financial statements;
  • the Office's Financial Statements and accountability reports (Reports on Plans and Priorities (RPP), Departmental Performance Reports (DPR), Annual Report to Parliament, testimony by the Commissioner to Parliament, and Public Accounts); and,
  • the arrangements with service providers who provide essential corporate services to the Office for the smooth functioning of its operations.

In addition, at in-camera sessions we reviewed documentation, met with the Chief Financial Officer and senior managers, discussed accountability reporting and organizational issues and provided advice to the Commissioner regarding: financial issues; risk management; consultations with stakeholders; building relations with counterparts in the provinces and municipalities; implementing the 2012 Budget decision for a 5% reduction in the OCL's operating budget; ongoing discussions within TBS and OCG with regard to the federal government's ongoing operations of Departmental Audit Committees as discussed at OCG workshops and meetings; and, the establishment of a framework for results, performance measurement and program evaluation. In-camera sessions have all been conducted in an appropriate venue, either at an OCL boardroom, at a secluded area of a restaurant, or at the private residence of the Commissioner or committee member. This has permitted an open and frank exchange regarding the issues and advice under consideration.

During the course of our work over the next 12 months, the Committee will continue to review these matters and the work underway to implement: the risk mitigation measures noted in the OCL's corporate risk profile; the OCL's multi-year plan for Internal Audit; the OCL's Performance Measurement Strategy; the OCL’s ongoing arrangements with service providers, and in particular, the transition for the provision of key IT infrastructure by the Office of the Privacy Commissioner; the resolution of issues related to the Phoenix payroll system; and, the essential common services delivered by Shared Services Canada. In addition, AEC plans to provide advice regarding the undertaking of an evaluation of the Education and Outreach Program. As in past years, the AEC will review the annual financial audit to be conducted by the OAG.

The Committee's mandate includes both Internal Audit and Results / Program Evaluation. OCL has carried out a step-by-step approach to the phased implementation of the Internal Audit and Results Policies. The Committee has reviewed the relevant TB and OCL Internal Audit Policy and Policy on Results and the associated directives, standards, and guidelines. The Committee plans to remain current with directives and policies that are issued by Central Agencies in these areas, and to provide its advice to the Commissioner in a timely manner.  

Discussion of significant concerns, recommendations for improvement

The Committee is pleased to have observed that the Office has continued to make significant progress and has set up its management systems, organizational structures, financial and administrative policies, internal controls, and accountability reporting in order to carry out its important work effectively. It is our view that the OCL has put in place all significant management policies and procedures. The next year will be one of fine tuning and reacting to any TBS policy changes.

We noted especially the continued success of the Office in advancing its independent operations and implementing effective arrangements for the provision of key Corporate Services with various service providers. From our perspective, these arrangements are working well and are delivering the planned efficiencies and cost avoidance for the OCL. 

We noted that during the past fiscal year, the OCL has continued to take a reasonable approach to implement the 5% reduction to its budget from the 2012 Budget by reducing the expenditures on development of the Registry of Lobbyists. While the negative impact of this budget reduction appears to have been absorbed to date without significant negative impacts on stakeholders, we caution that reduced investments aimed at keeping the Registry “user-friendly” over time may eventually have an impact on the effectiveness of the Registry. OCL's success to date with regard to increasing its Information Technology (IT) capacity and its new arrangement with the Office of the Privacy Commissioner to host the Registry may help to maintain the Registry's effectiveness in this regard in spite of the lower level of available resources.

The Office is a participant in a government-wide initiative with Shared Services Canada. We noted: the planned ongoing transition of some key IT services to Shared Services Canada (SSC); some of the delays experienced with regard to this transition; and, the continued operational risks associated with this transition. We have noted the audit findings of the OAG, published in 2015, concerning the SSC and its operations. Over the coming year, we will continue to closely monitor progress made in key projects related to this transition.

The Deputy Commissioner and Senior Financial Officer retired at the end of the last fiscal year. Temporary arrangements and adjustments have been put into place, pending the appointment of the new Commissioner. The other key positions at the OCL are staffed and the Office is operating as designed and implementing the Act in an active and professional manner, according to its legislative provisions. During the hearings held in 2011 and 2012 for Parliament's five-year review of the Act, the Commissioner presented her views with regard to issues for consideration by Parliament aimed at greater transparency and compliance. The Committee issued its Report in May 2012, and the previous Government has responded to the Committee Report. A second five-year review of the Act is expected in 2017. The Committee will be attentive to decisions or discussions of the Government with regard to these issues.

We noted that over the past year, the Commissioner continued to administer the Act with rigour and professionalism. Courts issued a number of decisions with regard to convictions under the Lobbying Act. These convictions send a clear message to stakeholders that there are consequences for non-compliance. 

We noted the excellent progress made by the Office in reviewing its control environment, in updating its formal corporate risk profile and explicit mitigation strategies and implementing its multi-year Internal Audit Plan. We noted that internal audit reports have been completed as planned and in a professional and timely manner and that the follow-up report on implementation of the management response has received appropriate attention and has been implemented.

However, as of March 21, 2017, a key component of the control environment, the delegated authorities’ framework, had not been approved by the Minister. We noted that while the OCL has enquired about the status of the approval on several occasions, it should continue to emphasize with TBS the importance of having this approval as soon as possible.

We noted that the Commissioner has put into place good lines of communication with officials of the OAG for the annual external audit by the OAG of the OCL financial statements. We reviewed with the OAG its audit plans and the results of its latest annual audit. We also held an in-camera session with OAG officials. In summary, the OAG found that the financial statements presented fairly, in all material respects, the financial position of the OCL, and found further that transactions have, in all significant respects, been in accordance with the Financial Administration Act and Regulations and the Lobbying Act.

We have carefully reviewed the OCL's corporate risk profile and the OCL's Multi-year Internal Audit Plan. We have reviewed and discussed completed internal audit reports, and the management action plans for these reports. Based on the documentation and the detailed planning and discussions that have taken place and been reviewed at our Committee, we consider that the Office has made very good progress to establish its Internal Audit Program.

We noted the well-designed control environment in place at the Office and the important steps that have been taken by the Commissioner to ensure sound management practices, including sound control, risk management, and accountability reporting at the Office. Based on completed audits and on our discussions during the meetings of our Committee, where we received reports from each of the managers of the Office and conducted in-camera sessions with the Commissioner, Chief Financial Officer, and Senior Executives, we have seen that there is a well-functioning governance structure at the OCL and that there is a rigorous and professional approach in place for the implementation of the OCL's mandate.

We have reviewed the OCL's financial statements, the RPP, the DPR and the Annual Report, and confirm our opinion that these accountability documents appear to be complete and that they present and explain the operations and achievements of the Office. Based on our discussions with the Senior Executives of the OCL and the Chief Financial Officer, we have noted the accuracy of the OCL's financial forecasts and the reliability of the information that has been provided. Over the course of our meetings during the past fiscal year, we have noted the care exercised by the Commissioner and the senior management team to ensure that the OCL's limited budget is used in the most cost-effective manner to implement its mandate.

We have reviewed the accomplishments and approved plans in place for improved risk management, internal audit, and evaluation, as well as the OCL's integrated business plan, and find that they are being advanced sincerely and with rigour. The Multi-year Audit Plan has been published on the OCL Internet site. The preliminary audit scope for each audit has been published with the Multi-year Audit Plan. We concur with the risk assessment and planning that is in place for OCL internal audits. The OAG completed its annual audit of the OCL financial statements. We find that the arrangements in place with regard to results measurement, evaluation and performance measurement, including the set of performance measures and logic model, are of high potential value. We are pleased to continue to provide advice in this regard in due course as the internal audit plans are implemented and as the evaluation of Outreach and Education proceeds, and as the plan for future program evaluations is advanced.

We have reviewed the OCL's presentations and the testimony provided to the Standing Committee on Access to Information, Privacy and Ethics, and we have provided advice in this regard during our regular meetings. We confirm that we believe that the Commissioner's testimony and accountability reports prepared for tabling in Parliament were done in a rigorous, professional manner.

We encourage the Office and the officials of the Office to build on the important work we have seen. The Office has shown a high level of professionalism in the conduct of internal audits, in the planning and conduct of its first evaluation, in the implementation of its performance measurement strategy, and in the conduct of a comprehensive review and rigorous external consultations with regard to the Lobbyists' Code of Conduct. In the current tight fiscal environment, it is important for the Office to continue to implement its plans for internal audit, results measurement, and program evaluation.

Summary comments

The Committee wishes to recognize the significant progress made by the Office to establish its systems and structures and to have operations running well. We continue to be impressed by the dedication of the Office to sound management practices and to its careful and thoughtful implementation of the challenging 5% budget reduction announced in the March 2012 federal Budget. We are of the view that OCL is managing well its limited budget. We have noted that the Office was successful in meeting its service standards even with fluctuating levels of lobbying activity over the past year. We wish to commend OCL officials regarding the high quality of the documentation, briefings and discussions at our meetings over the past year.

We look forward to continuing our excellent relationship and to offering independent and objective advice, guidance and assurance to the Commissioner on the adequacy of risk management, control and accountability processes for the important work carried out by the Office.

During the past year, our activity consisted of gaining a deeper understanding of the operations, issues and the ever-changing environment faced by the Office and providing advice to the Commissioner according to our Terms of reference.

We have noted the strengthening network of Registrars and Commissioners across Canada, the continued interest by Canadian municipalities in regulating lobbying at the municipal level and the increasing level of interest by other countries in this important and evolving area of public policy.

In due course, we look forward to briefing a new Commissioner with regard to these important matters.


Appendix A

Committee Terms of reference

Appendix B

Dates of meetings held from April 2016 to March 2017

In-camera
June 6, 2016
Regular meeting
June 7 & 8, 2016

Meeting with OAG to review external audit of financial statements
July 11, 2016

In-camera
September 19, 2016
Regular meeting
September 20, 2016

In-camera
December 19, 2016
Regular meeting
December 20, 2016

In-camera
March 20, 2017
Regular meeting
March 21, 2017

Meeting of Committee Chairs with the Comptroller General was held November 7, 2016
Annual OCG Symposium was held November 8, 2016

Appendix C

Biographical notes AEC members

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