Office of the Commissioner of Lobbying of Canada

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Audit and Evaluation Committee Annual Report 2023-24

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 2023-24 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)

Alain Toni Jalkh, CFO in transition

Meetings

Regular Meetings

During FY 2023-24 regular meetings of the Committee took place on:

June 13, 2023

September 18, 2023

November 9, 2023

February 5, 2024

Ad Hoc Meetings

Ad hoc meetings and discussions between the Commissioner and AEC members were held throughout the FY as required. During FY 2023-24 the following ad hoc meetings were held:

August 10, 2023 (draft Financial Statements, Q1 QFR)

March 19, 2024 (Evaluation of the Compliance Function)

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. Overall, the external members felt that communications with the Commissioner and other staff as appropriate were timely and open.

Summary of FY 2023-24 AEC meeting items

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

Agendas for AEC meetings were planned by the Chair and the CAE in accordance with the Plan and were approved or amended at the start of each AEC meeting. Items discussed at regular and ad hoc meetings of the AEC in FY 2023-24 included the following:

Internal Audits, Evaluations, and related engagements

One audit, one evaluation and an ICFR monitoring engagement were carried out in FY 2023-24. 

Audit of the Procurement Process The objectives of this audit were:

  • To determine whether management practices, systems and controls result in goods and services being acquired in accordance with stated requirements; 
  • To verify appropriate delegated financial signing authorities were applied; 
  • To validate adherence to policies and guidelines; and 
  • To confirm that value for money was obtained.

The results of this audit were provided to the Commissioner and to the AEC in FY 2024-25. Overall, the results were positive. The audit noted one instance of non-compliance with authorities on a non-competitive contract, whereby the OCL exceeded the contracting limit identified in its delegation of signing authorities matrix. That limit should have been higher and action by the OCL to adjust the limit to appropriate levels has since been completed. An Action Plan to avoid re-occurrence has been provided to the AEC.

Evaluation of the Compliance Function The objectives of the evaluation focused on the Compliance Directorate’s activities related to:

  • The processes, tools, guidance documents and procedures in place to support the compliance function;
  • The documented approach for performing activities in a consistent, accountable, and repeatable manner; and
  • The capacity of the program to meet its objective of fulfilling the purpose of the Lobbying Act.

The final report of this evaluation was provided to the Commissioner and to the AEC in March, 2024. 

The findings of that report stated that:

  • The current staffing situation is adversely affecting efficiency and timeliness; and
  • The elements are in place for the compliance function to be efficient.

There were no recommendations relating to the Compliance’s Directorate efficiency arising from the evaluation. The Commissioner agreed with the findings and conclusions of the report.

The Commissioner provided a Management Response to the AEC. In summary, the OCL will respond to the conclusions of the evaluation by:

  • Continuing its ongoing efforts to recruit, train and retain personnel in the Compliance Directorate; and
  • Implementing currently planned continuous improvements in the compliance processes, procedures, guidance documents, and other tools other tools as well as in the case management system

ICFR Monitoring The TB Policy on Financial Management requires OCL to ensure that a risk-based system of internal control over financial management is established, monitored and maintained and to report annually on internal controls over financial reporting (a subset of ICFM) in its annex to its financial statements. As an Agent of Parliament, the Commissioner, rather than a Minister or the OCG, is responsible to ensure that this is done. 

Operating effectiveness testing was completed for the following three control areas:

  • Management of Assets and Inventories (a year ahead of planned)
  • Budgeting and Forecasting (as planned)
  • Procurement of Goods and Services and Payment to suppliers (a year ahead of planned)

As well, documentation of Entity Level Controls was completed.

In FY 2024-25, OCL completed a management Action Plan to address recommendations that arose from the ICFR Monitoring engagement. The 2024-25 AEC Report will include details of this Plan.

Office of the Auditor General (OAG) Audit of Financial Statements

OCL Financial Statements are audited each year by the OAG. In August, 2023, the AEC reviewed the draft Financial Statements with OCL and provided comments on the statements and the ICFR Annex prior to meeting with the OAG. On September 18, 2023, the OAG Audit Principal responsible for audit of the FY 2022-23 OCL Financial Statements presented the results of the audit to the Committee. He 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.

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 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 2023-24. A full review is planned for FY 2025-26 but may be brought forward to start at the end of FY 2024-25.

Human Resources

At each meeting the Commissioner briefed the AEC on OCL staff 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 positions The AEC was briefed at every meeting on progress to fill vacant positions. AEC members recognized the difficulty of filling specialized IT or investigator positions on a temporary basis.
  • Staffing of the CFO/CAE position At the June 13, 2023 AEC meeting, the AEC was briefed on the OCL’s plan for staffing a replacement for the current CFO upon his planned departure in 2024.

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

Orientation and learning activities

Members of the Committee attended the virtual DAC symposium that was hosted by the Office of the Comptroller General in two sessions in November, 2023. Sessions included useful information on cybersecurity and environmental issues, as well as insightful remarks from the Secretary to the Cabinet, the Auditor General, the Comptroller General and other senior officials.

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. In addition, all participants at each AEC were asked to declare any conflicts of interest with agenda items.
  • At 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 other issues 
  • 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 2022-23 financial 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. 
  • 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. In FY 2024-25 this report will be tabled at the AEC meeting that takes place in the Jan-Mar 2025 period.

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 was prepared in FY 2021-22. The AEC has asked for an update to this plan.
  • The OCL has always made sufficient funds available to carry out planned audits, evaluations and related engagements.

In view of these observations and its ongoing work with the Commissioner and the CAE/CFO, the AEC advised the Commissioner is that the capacity and performance of the OCL’s internal audit and evaluation functions are improving. As noted in Section 13 of this report, the AEC has noted increased rigour in planning of audits, evaluations and related engagements and the associated Management Action Plans, and will continue to monitor progress.

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

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
  • 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 FY 2024-25:

  • Planning and Implementation of the RBAEP – Provision of advice on audits, evaluations, and reviews is central to the work of the AEC. OCL has recently made improvements in planning of engagements and in documentation and implementation of Management Action Plans.  The AEC will track the progress of these improvements throughout the FY.
  • Operational Briefings – The AEC Annual Plan for 2024-25 includes developing a better understanding of both the administration and the business of OCL through briefings by appropriate senior OCL staff. These briefings will help Committee members to provide advice regarding risks. 
  • Potential Transition to a New Commissioner  – Commissioner Belanger’s term finishes at the end of this calendar year. A new Commissioner may be appointed, or Commissioner Belanger’s term may be extended or she may be re-appointed. In any of these circumstances, the AEC will be prepared to assist the Commissioner in all the areas set out in our mandate.
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