Annex - Assessment of Internal Control Over Financial Reporting
For the year ended March 31, 2015
This document provides summary information on the measures taken by the Department of Justice to maintain an effective system of internal control over financial reporting, 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 of Justice 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 Mi nister, 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 financi al 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 of Justice’s delegation of authority, and provides accommodation services.
- Treasury Board of Canada Secretariat provides the Department of Justice 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 of Justice in the areas of data centre and network services.
Specific Arrangement for the Department of Justice
- The Department of Justice 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 p rovides an annual dollar figure for those legal services it provides without charge.
- The Department of Justice provides information on pending litigation cases in order to assist federal departments and agencies in the reporting of contingencies.
- The Department of Justice provides certain corporate (internal) services to the Public Prosecution Service of Canada.
- The Department of Justice 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 2014-15
The key findings and significant adjustments required from the current year’s assessment activities are summarized below.
New or significantly amended key controls
The work on the design of significant process to be implemented in future fiscal years was started during 2014 -15, including the Pay Transformation project to be implemented in 2015-16 and the new legal services funding model to be implemented in 2016-17 as part of the Legal Services Review. Significant adjustments were not required to date for the key controls.
On-going monitoring program
As part of its rotational on-going monitoring plan, the Department completed its 2014-15 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 expense and payable receivables and advances, and Family Law revenue financial statement accounts. For the most part, the key controls that were tested performed as intended, with remediation required as follows:
- The internal audit engagements, namely the Compliance with Financial Policy in Departmental Legal Services Units audit, the Cost Recovery Process Improvement (CRPI) Initiative – Phase 1 audit and lastly, the Review of IT Security, identified opportunities to further strengthen the design of key controls and address weaknesses in the operating of specific key controls.
Management action plans addressing the recommendations have been developed by the process owners.
4. Departmental action plan
4.1 Progress during fiscal year 2014-15
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.|
|Key process level controls for the following financial statement accounts: Professional and special services expense.||Completed as planned; remedial actions completed.|
|Key process level controls for the following financial statement account: Legal services revenue||Completed as planned; remedial actions started.|
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||X||X||X|
|IT General controls
Includes controls under Justice’s responsibility only
|Process level controls
The on-going monitoring schedule for specific financial statement accounts is outlined below.
|Family Law account (Liability)||X||X||X|
|Salaries and employee benefits (Expense)||X||X||X|
|Professional and special services (Expense)||X||X||X|
|Legal services revenue||X||X||X|
|Transfer payments (Expense and Payable)||X||X||X|
|Travel and relocation (Expense)||X||X|
|Tangible capital assets||X||X|
|Accounts payable and accrued liabilities||X||X|
|Receivables and advances||X|
|Family Law fees (Revenue)||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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