ARCHIVED - Treasury Board of Canada Secretariat - Supplementary Tables

This page has been archived.

2010-11
Departmental Performance Report

Treasury Board of Canada Secretariat

Supplementary Information (Tables)

---

Table of Contents

• Sources of Respendable and Non-respendable Revenue
• User Fees/External Fees
• Green Procurement
• Response to Parliamentary Committees and External Audits
• Internal Audits and Evaluations
• Financial Statements
• Appendix A—Votes
• Annex to Statement of Management Responsibility including Internal Control over Financial Reporting

Sources of Respendable and Non-Respendable Revenue

Respendable Revenue

Program Activity	2008-09 Actual ($ thousands)	2009-10 Actual ($ thousands)	2010-11 ($ thousands)
			Main Estimates	Planned Revenue	Total Authorities	Actual
People Management
Revenue related to the administration of the Public Service Superannuation Act1,3	3,182	3,913		6,335	6,335	4,564
Government-Wide Funds and Public Service Employer Payments
Revenue related to public service insurance2	333,858	361,321	369,999	370,000	371,986	371,986
Total Respendable Revenue	337,040	365,234	369,999	376,335	378,322	376,550

1. Respendable revenue received is to cover salaries and operating costs from public service superannuation with respect to chargeable costs associated with administering the Public Service Superannuation Act. In previous years, it was reported under the Management Policy Development and Oversight program activity.
2. Respendable revenue received is to cover health care insurance plans' costs from revolving funds and from departments and agencies that pay for employee benefit plans from a non-statutory appropriation. This account is also used to record pensioners' share of pensioners' dental services plan contributions.
3. Respendable revenue approval was received subsequent to the 2010–11 Main Estimates.

Non-Respendable Revenue

Program Activity	2008-09 Actual ($ thousands)	2009-10 Actual ($ thousands)	2010-11 ($ thousands)
			Main Estimates	Planned Revenue	Total Authorities	Actual
Revenue from parking fees1	11,643	11,595		11,882	10,672	10,672
External revenue from access to information	1	1			4	4
Revenue related to the administration of the Public Service Superannuation Act2	854	860		1,510	931	931
Refunds of previous year's expenditure	744	384			590	590
Disciplinary penalties	33	63			38	38
Proceeds from the disposal of surplus Crown assets	7	1			0	0
Other	34	15			34	34
Total Non-Respendable Revenue	13,316	12,919		13,392	12,269	12,269

1. The revenue represents parking fees that are collected from public servants in government-owned or government-leased facilities. This revenue is deposited directly into the Consolidated Revenue Fund and cannot be used to offset operating expenditures.
2. The revenue represents the portion received from public service superannuation with respect to costs associated with administering the Public Service Superannuation Act and covers the costs of employee benefit plans, health and accommodation.

User Fees Reporting

User Fees and Regulatory Charges/External Fees

• User Fees and Regulatory Charges
• External Fees

---

User Fees and Regulatory Charges (User Fees Act)

External Fees (Policy on Service Standards for External Fees)

External Fee	Service Standard	Performance Results	Stakeholder Consultation
Fees charged for the processing of access to information requests.	Response provided within 30 days following receipt of request; the response time may be extended pursuant to section 9 of the ATIA. Notice of extension is to be sent within 30 days after receipt of the request.	Statutory deadlines met 97 per cent of the time.	The service standard is established by the ATIA and related regulations. Consultations with stakeholders were undertaken for amendments in 1986, 1992 and 2005.

Note: As established pursuant to the Policy on Service Standards for External Fees:

• service standards may not have received parliamentary review;
• service standards may not respect all performance standard establishment requirements under the UFA (e.g., international comparison or independent complaint address); and
• performance results are not legally subject to section 5.1 of the UFA regarding fee reductions for unachieved performance.

Green Procurement

Green Procurement Capacity Building

Performance Measures for Green Procurement Capacity Building

Training for Procurement and Materiel Management Staff: Number of procurement and materiel management staff with formal green procurement training (e.g., Canada School of Public Service course C215 or an in-house, tailored alternative) relative to total number of procurement and materiel management staff.

Training for Acquisition Cardholders: Number of acquisition cardholders with formal green procurement training (e.g., Canada School of Public Service course C215 or an in-house, tailored alternative) relative to total number of acquisition cardholders.

Performance Evaluations: Number of performance evaluations of managers and functional heads of procurement and materiel management that incorporate environmental considerations relative to total number of performance evaluations of managers and functional heads of procurement and materiel management.

Procurement Processes and Controls: Number of departmental procurement processes and controls that incorporate environmental considerations relative to total number of departmental procurement processes and controls that should address environmental considerations. Alternatively, departments and agencies can report on progress to improve the integration of environmental considerations in management processes and controls relative to procurement.

Activity	Target as % (as reported in 2010–11 RPP)	Actual Results as %	Description/Comments
Training for Procurement and Materiel Management Staff	90%	Exceeded (100%)	100% of Procurement and Materiel Management personnel have completed the required training.
Training for Acquisition Cardholders	75%	Not Met (53%)	Acquisition card policies have now been created whereby it is mandatory to complete green procurement training to be issued an acquisition card. In order to receive their acquisition card, all new cardholders must demonstrate proof of completion of the Green Procurement course. Current cardholders are also required to complete the green procurement training if this has not been done. As of March 31, only 134 of a total of 253 cardholders, or 53%, had completed the green procurement training.
Performance Evaluations	All identified managers and functional heads will have environmental consideration clauses incorporated into their performance agreements for the 2011–12 fiscal year.	Met	Environmental consideration clauses have been incorporated into the performance agreements of managers and functional heads of Procurement and Materiel Management.
Procurement Processes and Controls	By March 31, 2011, all identified management processes and controls relating to procurement will have incorporated environmental considerations.	Somewhat Met	All procurement processes and controls are managed by the Treasury Board of Canada Secretariat's (the Secretariat's) Contracting, Procurement and Materiel Management Division. Processes have been identified and revisions are being drafted. Green procurement considerations are being incorporated into the revised processes and documentation supporting the Procurement Renewal Initiative. Green procurement activities are tracked through the Secretariat's financial system, IFMS (SAP).

Use of Green Consolidated Procurement Instruments

Performance Measures for Use of Green Consolidated Procurement Instruments

Dollar value of purchases against green consolidated procurement instruments (as designated by Public Works and Government Services Canada [PWGSC]) for a specified good or service relative to total dollar value of purchases for that good or service.

Dollar value of purchases that incorporate environmental considerations for a good or service relative to total dollar value of purchases for that good or service. (This performance measure applies when a green consolidated procurement instrument, as designated by PWGSC, was not used or was unavailable for the specified good or service.)

Good/Service	Target as % (as reported in 2010–11 RPP)	Actual Results as %	Description/Comments
IT Peripherals	95%	Somewhat Met	The Secretariat's Information Management and Technology Directorate provides advice on purchasing IT peripherals that includes environmental considerations, but the Secretariat's procurement of IT peripherals is currently decentralized. The Secretariat does include energy ratings for desktops when requesting bids under Request for Volume Discount (RVD). The Secretariat will be centralizing the purchase of IT peripherals in the 2011–12 fiscal year.
Vehicles	100%	N/A	No vehicles were purchased in 2010–11. For any future fleet purchases, the Secretariat will continue the practice of purchasing hybrid vehicles for its fleet.

Response to Parliamentary Committees and External Audits

Table of Contents

Response to Parliamentary Committees

• Standing Committee on Public Accounts: Report 4, Chapter 1, "Gender-Based Analysis," of the Spring 2009 Report of the Auditor General of Canada
• Standing Committee on Public Accounts: Report 5, Chapter 1, "Safeguarding Government Information and Assets in Contracting," of the October 2007 Report of the Auditor General of Canada
• Standing Committee on Public Accounts: Report 6, Chapter 3, "Human Resources Management - Foreign Affairs and International Trade Canada," of the May 2007 Report of the Auditor General of Canada
• Standing Committee on Public Accounts: Report 8, Chapter 6, "Selected Contribution Agreements - Natural Resources Canada," of the Spring 2009 Report of the Auditor General of Canada
• Standing Committee on Public Accounts: Report 9, Chapter 2, "Intellectual Property," of the Spring 2009 Report of the Auditor General of Canada
• Standing Committee on Public Accounts: Report 10, Public Accounts of Canada 2009
• Standing Committee on Public Accounts: Report 15, Selected Departmental Performance Reports for 2008-2009 - Department of Industry, Department of Transport
• Standing Committee on Public Accounts: Report 17, Chapter 1, "Evaluating the Effectiveness of Programs," of the Fall 2009 Report of the Auditor General of Canada
• Standing Committee on Public Accounts: Report 19, Chapter 5, "Acquiring Military Vehicles for Use in Afghanistan," of the Fall 2009 Report of the Auditor General of Canada

Response to the Auditor General (including to the Commissioner of the Environment and Sustainable Development)

• 2010 Fall Report of the Auditor General of Canada
• 2010 Spring Report of the Auditor General of Canada

External Audits (Note: These refer to other external audits conducted by the Public Service Commission of Canada or the Office of the Commissioner of Official Languages)

---

Response to Parliamentary Committees

Standing Committee on Public Accounts: Report 4, Chapter 1, "Gender-Based Analysis," of the Spring 2009 Report of the Auditor General of Canada

(Adopted by the Committee on March 16, 2010; presented to the House on April 14, 2010)

Summary of Report	Discussion of progress made to address recommendations	Link to the Secretariat's response
Gender-based analysis (GBA) is an analytical tool used to assess how policies might impact men and women differently. When used effectively, GBA attempts to integrate gender sensitivity at each stage of the policy analysis process. Responsibility for performing GBA is shared throughout the federal government. The Committee believes that Status of Women Canada (SWC) should take a leadership role in GBA implementation and that it is best placed to close the accountability loop by reporting on the government's progress in implementing its action plan. A Supplementary Opinion was included in the Report from the members of the Committee representing the Conservative Party of Canada to highlight Canada as a leader in GBA analysis. The Supplementary Opinion also brings up the release of the government's Action Plan on GBA. The partnership between SWC, the Privy Council Office (PCO) and the Secretariat will allow for continued guidance to departments and agencies in discussing GBA challenges.	In recommendations 2 and 3 related to the challenge function, the Committee asked the Secretariat and PCO to require departments and agencies to explain in writing why gender impacts were deemed to be relevant or not. The position of central agencies is that the challenge function is generally done informally or verbally and that documentation would not inherently improve the nature of the challenge function. Recommendation 4 asked the Secretariat to clarify the government's commitment to GBA and develop a communications plan to provide clear guidance on what is expected of departments and agencies in relation to GBA. Since the tabling of the GBA Action Plan, SWC with the support of the central agencies has been working with federal organizations to meet expectations for the application of GBA and the creation of GBA framework elements.	Government Response (Presented to the House on August 18, 2010)

Standing Committee on Public Accounts: Report 5, Chapter 1, "Safeguarding Government Information and Assets in Contracting," of the October 2007 Report of the Auditor General of Canada

(Adopted by the Committee on March 16, 2010; presented to the House on April 14, 2010)

Summary of Report	Discussion of progress made to address recommendations	Link to the Secretariat's response
The Committee was concerned about the security of government information and assets that are made available to contractors hired from the private sector. The Department of Public Works and Government Services (PWGSC) is the lead department for procurement in the federal government. The Secretariat adopted a Policy on Government Security, under which each department is responsible for protecting sensitive information and assets for any contract it manages. The Committee believes that the Secretariat must be more proactive in ensuring that Treasury Board policies are clear and that departments and agencies understand their responsibilities. The Committee was critical of the Secretariat's ability to monitor compliance and of its willingness to hold departments and agencies to account for failure to comply with Treasury Board policies.	In response to the specific recommendations, PWGSC and the Secretariat provided the Committee with the consolidated results of the Management Accountability Framework Assessments for Round V and Round VI, showing federal institution compliance with Area of Management 19 (Security and Business Continuity). The Secretariat and PWGSC also provided the Committee with the results of a review of whether all contracts with a security requirement of Secret level or higher should be processed by the Industrial Security Program. The review determined that the processing of these contracts should not be consolidated in one organization but made a number of conclusions to improve the processing of the security requirements across government.	Government Response to the Fifth Report of the Standing Committee on Public Accounts (Presented to the House on September 20, 2010) Report on the Review of Security in Contracting Presented to the Committee on March 9, 2011)

Standing Committee on Public Accounts: Report 6, Chapter 3, "Human Resources Management - Foreign Affairs and International Trade Canada," of the May 2007 Report of the Auditor General of Canada

(Adopted by the Committee on March 16, 2010; presented to the House on April 14, 2010)

Summary of Report	Discussion of progress made to address recommendations	Link to the Secretariat's response
The Committee was concerned that Foreign Affairs and International Trade Canada (DFAIT) did not have a strategic plan for its human resources and that its ability to respond to growing and changing demands and meet objectives such as coordinating Canada's efforts abroad might be hampered.	The Secretariat participated in the response to two recommendations. The Committee asked for the results of the Foreign Service Directives Review and an action plan for the implementation of the results. The review was completed in 2008 and came into effect on April 1, 2009. New directives have been implemented. Prior to the effective date, there was extensive outreach to clients and training of administrators. In addition, the Committee asked the Secretariat to work in partnership with members of the National Joint Council to improve the flexibility and accessibility of accidental death and dismemberment insurance for public service employees posted abroad. The government's position is that the insurance provided by the Government of Canada as an employer through the Workman's Compensation Board has proven to be reliable and effective for public service employees posted abroad. In response to the May 2007 Auditor General's Report, DFAIT provides extra accidental death and dismemberment insurance for DFAIT public service employees serving in Afghanistan and Iraq through an external supplier. Other departments and agencies have followed DFAIT's example.	Government Response to the Report of the Standing Committee on Public Accounts (Presented to the House on August 18, 2010)

Standing Committee on Public Accounts: Report 8, Chapter 6, "Selected Contribution Agreements - Natural Resources Canada," of the Spring 2009 Report of the Auditor General of Canada

(Adopted by the Committee on March 25, 2010; presented to the House on April 19, 2010)

Summary of Report	Discussion of progress made to address recommendations	Link to the Secretariat's response
The Committee was troubled by events that occurred at Natural Resources Canada's (NRCan's) Office of Energy Efficiency, which had entered into a series of contribution agreements with private sector organizations. An internal audit assessed NRCan's control and management practices in administrating the contribution agreements and found material breaches of the terms and conditions of the agreements. The Committee believes that this situation may arise in other departments and agencies and considers that it is necessary for all federal organizations to take action to prevent conflicts of interest. The Committee also believes that the Secretariat should provide all departments and agencies with additional guidance on avoiding conflict of interest when managing grants and contributions.	The Secretariat was asked to provide clear rules and guidance, including draft contractual provisions, to departments and agencies to assist them in identifying and avoiding conflict of interest by contractors and the recipients of transfer payments. The Secretariat was also asked to provide guidance on how to reconcile possible conflicting contractual obligations arising from contribution agreements and statutory requirements outlined in the Financial Administration Act. The government agrees that the prevention of situations of conflict of interest is fundamental to maintaining the public's trust in public institutions, and the government is committed to ensuring that requirements are as clear as possible. Over the past few years, the government has made significant changes to enable public service employees to identify and avoid conflict of interest. In addition, the government has been working on renewing the suite of Treasury Board policies and clarifying the management responsibilities and accountabilities of deputy heads, including clear compliance requirements and consequences. The Secretariat is also developing a new Values and Ethics Code for the Public Sector. In addition, the Treasury Board Directive on Account Verification, renewed in 2009, sets out specific requirements for ensuring that payments are properly authorized and accurate, and fulfill legitimate obligations.	Government Response to the Eighth Report of the Standing Committee on Public Accounts (Presented to the House on September 20, 2010)

Standing Committee on Public Accounts: Report 9, Chapter 2, "Intellectual Property," of the Spring 2009 Report of the Auditor General of Canada

(Adopted by the Committee on March 25, 2010; presented to the House on April 19, 2010)

Summary of Report	Discussion of progress made to address recommendations	Link to the Secretariat's response
The Committee is concerned that the federal government does not manage Crown-owned intellectual property effectively. The Committee found that the decentralized approach to intellectual property in the federal government is not working well. It believes that the Secretariat should provide stronger leadership, coordination and direction on this issue. The Secretariat should also use the best practices and expertise of National Research Council Canada to better assist departments and agencies in developing effective policies and practices to manage internally generated intellectual property.	Industry Canada (IC) and the Secretariat are working in collaboration to improve monitoring of the application of the Policy on Title to Intellectual Property Arising Under Crown Procurement Contracts. They are also working together to ensure that intellectual property data is accurately interpreted and that reporting systems correctly report ownership to support future evaluation of the policy. In November 2009, a joint IC-Secretariat Action Plan was tabled before the Committee. All activities that IC and the Secretariat committed to undertake are completed or in progress. The government's efforts to provide administrative and policy guidance include an implementation guide to assist departmental officials in understanding policy requirements. The Canada School of Public Service, with guidance from IC and the Secretariat, is developing a course that will provide background on intellectual property and guidance on the interpretation of the policy.	Government Response to the Ninth Report of the Standing Committee on Public Accounts (Presented to the House on August 18, 2010)

Standing Committee on Public Accounts: Report 10, Public Accounts of Canada 2009

(Adopted by the Committee on April 1, 2010; presented to the House on April 28, 2010)

Summary of Report	Discussion of progress made to address recommendations	Link to the Secretariat's response
The Committee recommended that instead of taking a cautious approach, the government make a firm commitment to adopt accrual appropriations. Further, the Committee is concerned about departments and agencies allowing funds to lapse and about losses to the Crown and the lack of disclosure of errors found in the Public Accounts of Canada.	The Government Response addresses accrual appropriations, a long-standing Committee concern. In 2008, the government adopted a pilot project to implement accrual budgeting, which is currently underway. Sixteen departments and agencies are including accrual-based information in their Reports on Plans and Priorities (RPPs). All remaining departments and agencies included the information in their 2011–12 RPPs. In 2012–13, an evaluation will be conducted to assess the benefits and costs of accrual appropriations. The President of the Treasury Board will then ask interested parliamentarians to establish a Parliamentary Working Group. This group will participate in the evaluation process and report the results and recommendations of the evaluation to Cabinet and Parliament. The Government Response also addresses the issue of errors found in the Public Accounts of Canada. The government agreed that the Comptroller General of Canada will disclose errors and other concerns in the Public Accounts of Canada to the Committee prior to the commencement of its hearing on the matter. Thus, prior to appearing before the Committee in March 2011, the government informed the Clerk of the Committee about known errors in the published report. In addition, corrections of errors are now displayed in a new "Errata" section of the Public Accounts of Canada Web page. The Government Response highlights several initiatives put in place by the government to improve internal controls. The Treasury Board Policy on Internal Controls, which took effect in April 2009, addresses the Committee's concerns regarding losses of money or property due to offences, illegal acts or accidents reported in Volume 3 of the Public Accounts of Canada. As a result, since the Fall of 2010 and commencing with large departments, Departmental Performance Reports contain links to an annual risk-based assessment on the state of internal controls.	Government Response to the Tenth Report of the Standing Committee on Public Accounts (Presented to the House on August 18, 2010)

Standing Committee on Public Accounts: Report 15, Selected Departmental Performance Reports for 2008-2009 - Department of Industry, Department of Transport

(Adopted by the Committee on June 10, 2010; presented to the House on September 20, 2010)

Summary of Report	Discussion of progress made to address recommendations	Link to the Secretariat's response
The Committee found that parliamentarians do not give much attention to the Departmental Performances Reports (DPRs), in part because they are dissatisfied with their quality. The Committee recommended that all House of Commons Standing Committees review the DPRs referred to them to ensure that the reports contain the information needed to allow parliamentarians to hold the government to account. However, the Committee stressed that it is up to parliamentarians and committees to encourage government to provide reports that are useful and to make recommendations to improve the reports.	The Government Response states that improving the overall quality of DPRs continues to be a priority for government. In 2007, the Secretariat implemented a strategy to improve the content and form of these documents. Specifically, for the 2013–14 DPRs, the Secretariat will explore how departments and agencies can use departmental websites to present indicator methodologies in order to provide parliamentarians with more accurate performance information, including information on the methodology used to present results. The Committee recommended that the DPRs provide credible and balanced reports. The government agrees that DPRs should serve as an accurate depiction of department and agency successes and shortcomings over the course of the reporting period. The Secretariat supports the practice of balanced reporting and expanded its guidance for the 2010–11 DPRs to emphasize the need for departments and agencies to discuss the steps they have taken to modify program design and delivery in order to improve performance, where warranted and supported by evidence. The Secretariat also committed to develop a new common structure that will provide a standardized index and template for all departments and agencies to follow in preparing their 2010–11 DPR. Departments and agencies will continue to have the flexibility needed to adapt reports to their unique context, mandate and results. The government concurs with the Committee's recommendation that departments and agencies provide detailed financial and performance information about programs on their websites. Various departments and agencies have already begun posting more detailed program information to complement the results reporting contained in the DPRs.	Government Response to the Fifteenth Report of the Standing Committee on Public Accounts (Presented to the House on January 31, 2011)

Standing Committee on Public Accounts: Report 17, Chapter 1, "Evaluating the Effectiveness of Programs," of the Fall 2009 Report of the Auditor General of Canada

(Adopted by the Committee on June 17, 2010; presented to the House on September 20, 2010)

Summary of Report	Discussion of progress made to address recommendations	Link to the Secretariat's response
The Committee has encouraged the development of effectiveness evaluation because this provides managers with an objective, evidence-based assessment of the extent to which government programs are achieving their intended results. The Committee is pleased that the government has strengthened the requirements for evaluation. However, the Committee would like to see further improvements made in this area.	The government agrees with the Committee on the importance of evaluating programs to provide reliable information on program effectiveness for decision making. It values the Committee's support for the continued development of effectiveness evaluation in the federal government and for the recently strengthened policy requirements for evaluation. The government recognizes program evaluation as a key source of information on value for money, including program effectiveness, efficiency, economy and relevance. As a management tool, evaluation supports policy and program improvement, expenditure management, Cabinet decision making and public reporting by providing reliable, neutral assessments of the value for money of government programs. With the renewal of the Government of Canada's Expenditure Management System in 2007, evaluation plays an increasingly important role in the effective management of public spending. It is also in keeping with the Government Response to the Public Accounts of Canada's Fourth Report, tabled in July 2008, which accepted a recommendation that the Secretariat reinforce the importance of evaluation by adding program evaluation as a key requirement in the Expenditure Management System. As a result, Treasury Board's 2009 Policy on Evaluation introduced significant changes for the evaluation function government-wide that aim to expand the evaluation coverage of programs, focus evaluations on value-for-money issues, ensure the collection of ongoing performance data to support evaluations, and improve the governance and neutrality of the function. Because of the substantial changes introduced in the 2009 Policy on Evaluation, a four-year gradual implementation has been adopted to give institutions adequate time to adapt to the new requirements and to build their evaluation capacity to meet policy requirements. During the implementation of the Policy on Evaluation and the Policy on Management, Resources and Results Structures, the Secretariat will continue to provide advice and support to departments and agencies on improving their evaluation functions and their ongoing performance measurement. The Annual Report on the Health of the Evaluation Function will be publicly released after it has been approved by Treasury Board and will track progress on the evaluation function.	Government Response to the Seventeenth Report of the Standing Committee of Public Accounts (Presented to the House on January 31, 2011)

Standing Committee on Public Accounts: Report 19, Chapter 5, "Acquiring Military Vehicles for Use in Afghanistan," of the Fall 2009 Report of the Auditor General of Canada

(Adopted by the Committee on October 7, 2010; presented to the House on October 25, 2010)

Summary of Report	Discussion of progress made to address recommendations	Link to the Secretariat's response
In order for the Canadian Forces to carry out their operations in Afghanistan in an effective and safe manner, National Defence and Public Works and Government Services Canada (PWGSC) acquired equipment to better protect against improvised explosive devices. The Committee commended the work being done by Canadian Forces personnel in Afghanistan and recognized the work of officials at National Defence and PWGSC to provide equipment to the Forces as quickly as possible. However, the Committee believes that it is important to learn from this experience to ensure that future urgent needs are met in an efficient and effective manner. The Committee is critical of National Defence for not disclosing some important information to the Secretariat.	In Recommendation 3, the Committee asked that PWGSC and the Secretariat develop criteria and guidelines on how to manage urgent acquisitions. In response to the Committee, PWGSC, with input from the Secretariat, developed and posted on the Internet a Policy Notification establishing a new section in the PWGSC Supply Manual on "Managing Urgent Acquisitions," effective December 20, 2010. This Policy Notification updates instructions to contracting officers on the process for acquiring goods and services when there is an urgent requirement. The notification defines what is considered an urgent requirement and provides strategies to expedite the procurement process when a requirement is considered urgent. It stresses the importance of engaging PWGSC early in the process, developing an integrated approach and engaging with industry and other stakeholders. It states that concurrent review processes should be established and used whenever possible. Where project approval is required from the Treasury Board, consideration is given to developing a joint Treasury Board submission signed by both the Minister of Public Works and Government Services Canada and the minister of the department seeking project approval and contract approval at the same time.	Government Response to the Nineteenth Report of the Standing Committee on Public Accounts Acquiring Military Vehicles for Use in Afghanistan (Presented to the House on February 18, 2011)

Response to the Auditor General (including to the Commissioner of the Environment and Sustainable Development)

2010 Fall Report of the Auditor General of Canada 

Chapter 1—Canada's Economic Action Plan

This audit looked at the Economic Action Plan as it was being delivered, how programs were designed and delivered, and what steps were taken to ensure that only eligible projects were funded. The Secretariat received two recommendations; our responses can be found in this chapter's Appendix B—List of recommendations.

Chapter 4—Managing Conflict of Interest

The objective of this audit was to determine whether departments and agencies have provided the tools that public service employees need to meet the federal government's responsibilities for managing conflict of interest. The Secretariat received two recommendations; our responses can be found in this chapter's Appendix—List of recommendations.

Chapter 6—Acquisition of Military Helicopters

This audit examined whether National Defence and Public Works and Government Services Canada managed the acquisition of the maritime and the medium-to-heavy-lift helicopters in compliance with selected key provisions of applicable regulations and policies. The Secretariat received no recommendations.

2010 Spring Report of the Auditor General of Canada

Chapter 1—Aging Information Technology Systems

This audit looked at the extent to which selected organizations have adequately identified and managed the risks associated with the aging of IT systems. The Secretariat received one recommendation; our response can be found in this chapter's Appendix—List of recommendations.

Chapter 2—Modernizing Human Resource Management

The objective of this audit was to determine whether central human resources agencies and selected departments and agencies have implemented the new requirements of the Public Service Modernization Act. The Secretariat received one recommendation; our response can be found in this chapter's Appendix—List of recommendations.

External Audits (Note: These refer to other external audits conducted by the Public Service Commission of Canada or the Office of the Commissioner of Official Languages)

Not Applicable

Internal Audits and Evaluations

Internal Audits (current reporting period)

Name of Internal Audit	Internal Audit Type	Status	Completion Date
Audit of the Management of the Public Service Disability Insurance Plan	Assurance	Completed	August 2010
Audit of Account Verification	Assurance	Completed	April 2010
Audit of the Management Control Framework of the Public Service Pension Plan	Assurance	In progress	October 2011
Audit of Business Continuity Planning	Assurance	In progress	October 2011

Evaluations (current reporting period)

Name of Evaluation1	Program Activity	Status	Completion Date
Summative Evaluation of the Pilot Project on Non-Lapsing Appropriations for Capital Asset Management	Management Frameworks	Completed	September 2010
Evaluation of the Cabinet Directive on Streamlining Regulations	Management Frameworks	Completed	May 2011
Evaluation of the International Public Sector Accounting Standards Board	Management Frameworks	Completed	May 2011
Evaluation of the Policy on Internal Audit	Management Frameworks	Completed	June 2011
Evaluation of the PMSA [Public Service Modernization Act] Strategic Investment Framework	People Management (Former Canada Public Service Agency)	Finalization stage	September 2011
Evaluation of the Joint Learning Program	People Management	In progress	September 2011
Evaluation of the Official Languages Centre of Excellence Initiative, a component of the Treasury Board of Canada Secretariat under the Road Map for Canada's Linguistic Duality	People Management	In progress	April 2012
Evaluation of Comprehensive Management of Compensation	People Management	In progress	September 2012

1. Link to reports

Treasury Board of Canada Secretariat
Financial Statements (Unaudited)
For the Year Ended March 31, 2011

Statement of Management Responsibility Including Internal Control over Financial Reporting

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2011, and for all information contained in these statements rests with the management of the Treasury Board of Canada Secretariat (the Secretariat). These financial statements have been prepared by management in accordance with Treasury Board accounting policies, which are based on Canadian generally accepted accounting principles for the public sector.

Management is responsible for the integrity and objectivity of the information in these financial statements. Some of the information in the financial statements is based on management's best estimates and judgment, and gives due consideration to materiality. To fulfill its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of the Secretariat's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada and included in the Secretariat's Departmental Performance Report is consistent with these financial statements.

Management is also responsible for maintaining an effective system of internal control over financial reporting designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are properly authorized and recorded in accordance with the Financial Administration Act and other applicable legislation, regulations, authorities and policies.

Management seeks to ensure the objectivity and integrity of data in its financial statements through careful selection, training, and development of qualified staff; through organizational arrangements that provide appropriate divisions of responsibility; through communication programs aimed at ensuring that regulations, policies, standards, and managerial authorities are understood throughout the Secretariat; and through conducting an annual assessment of the effectiveness of the system of internal control over financial reporting.

An assessment for the year ended March 31, 2011, was completed in accordance with the Policy on Internal Control, and the results and action plans are summarized in the Annex.

The system of internal control over financial reporting is designed to mitigate risks to a reasonable level based on an ongoing process to assess key risks, to assess effectiveness of associated key controls, and to make any necessary adjustments.

The system of internal control is monitored by Internal Audit, which conducts periodic audits and reviews of different areas of the Secretariat's operations. In addition, the Chief Audit Executive has free access to the Audit Committee, which oversees and provides advice to management on its responsibilities for maintaining adequate control systems and the quality of financial reporting. The Committee undertakes a review of the financial statements, including all significant accounting estimates and judgments therein, and advises the Secretariat on any apparent material concerns.

The financial statements of the Secretariat have not been audited.

Statement of Financial Position (Unaudited)
At March 31
($ thousands)

	2011	2010 Restated (Note 12)
Contingent liabilities (Note 8) Contractual obligations (Note 9) The accompanying notes form an integral part of these financial statements.
Assets
Financial assets
Due from the Consolidated Revenue Fund	128,815	230,748
Accounts receivable and advances (Note 4)	353,385	659,454
Non-financial assets
Prepaid expenses	58	64
Tangible capital assets (Note 5)	15,242	14,722
Total Assets	497,500	904,988
Liabilities and Equity of Canada
Liabilities
Accounts payable and accrued liabilities (Note 6)	530,343	566,775
Vacation pay and compensatory leave	9,093	10,137
Employee future benefits (Note 7)	39,030	36,126
Total liabilities	578,466	613,038
Equity of Canada	(80,966)	291,950
Total Liabilities and Equity	497,500	904,988

Statement of Operations (Unaudited)
For the year ended March 31
($ thousands)

	2011 Planned Results*	2011	2010
Segmented information (Note 11) The accompanying notes form an integral part of these financial statements. * Planned results were presented in the 2010–11 future-oriented financial statements and included in the department's 2010–11 Report on Plans and Priorities (RPP).
Expenses
Government-Wide Funds and Public Service Employer Payments	2,231,393	1,959,769	2,067,613
Management Frameworks	65,534	71,643	72,026
People Management	62,071	74,002	70,793
Expenditure Management	32,912	33,540	35,836
Financial Management	30,514	31,452	27,104
Internal Services	97,869	102,782	94,214
Total Expenses	2,520,293	2,273,188	2,367,586
Revenues
Government-Wide Funds and Public Service Employer Payments	11,909	10,714	11,667
People Management	7,845	5,592	4,772
Internal Services	0	17	8
Total Revenues	19,754	16,323	16,447
Net Cost of Operations	2,500,539	2,256,865	2,351,139

Statement of Equity of Canada (Unaudited)
At March 31
($ thousands)

	2011	2010 Restated (Note 12)
The accompanying notes form an integral part of these financial statements.
Equity of Canada, beginning of year	291,950	(43,874)
Net cost of operations	(2,256,865)	(2,351,139)
Net cash provided by government	1,960,624	2,640,093
Change in due from the Consolidated Revenue Fund	(101,933)	43,148
Services provided without charge by other government departments (Note 10)	25,129	23,839
Transfer of assets and liabilities from other government departments (Note 5)	129	(20,117)
Equity of Canada, end of year	(80,966)	291,950

Statement of Cash Flow (Unaudited)
For the year ended March 31
($ thousands)

	2011	2010
The accompanying notes form an integral part of these financial statements.
Operating activities
Net cost of operations	2,256,865	2,351,139
Non-cash items:
Amortization of tangible capital assets	(3,302)	(3,341)
Gain (loss) on disposal of tangible capital asset	0	1
Services provided without charge by other government departments (Note 10)	(25,129)	(23,839)
Variations in Statement of Financial Position:
Increase (decrease) in accounts receivable and advances	(306,069)	429,405
Increase (decrease) in prepaid expenses	(6)	64
Decrease (increase) in accounts payable and accrued liabilities	36,432	(127,561)
Decrease (increase) in vacation pay and compensatory leave	1,044	(3,590)
Decrease (increase) in employee severance benefits	(2,904)	(7,238)
Transferred from Public Service Human Resources Management Agency of Canada, effective April 1, 2009	0	20,117
Cash used in operating activities	1,956,931	2,635,157
Capital investing activities
Acquisitions of tangible capital assets	3,693	1,263
Transfer of capital assets from Department of Finance Canada and Public Service Human Resources Management Agency of Canada	0	3,687
Proceeds from disposition of tangible capital assets	0	(14)
Cash used in capital investing activities	3,693	4,936
Net cash provided by the Government of Canada	1,960,624	2,640,093

1. Authority and Objectives

Under the broad authority of sections 5 to 13 of the Financial Administration Act, the Secretariat supports the Treasury Board as a committee of ministers in its role as the general manager and employer of the public administration. It is headed by a Secretary, who reports to the President of the Treasury Board.

The mission of the Secretariat is to ensure that the rigorous stewardship of public resources achieves results for Canadians.

The core business of the Secretariat is currently organized into six programs compared to four programs in 2009–10. Therefore, figures for 2009–10 in the Statement of Operations are redistributed for comparison purposes.

The Program activities are described as follows:

a) Government-Wide Funds and Public Service Employer Payments

The Government-Wide Funds and Public Service Employer Payments program activity accounts for funds that are held centrally by the Secretariat to supplement other appropriations, and from which payments and receipts are made on behalf of other federal organizations. These funds supplement the standard appropriations process and meet certain responsibilities of the Treasury Board as employer of the core public administration.

b) Management Frameworks

In support of the Treasury Board's role as management board, the Secretariat provides the framework for the management of government operations. It does so by developing specific policies, regulations, directives, and guidelines that, once approved by the Treasury Board, provide the parameters within which deputy heads manage their departments. The Secretariat also helps build understanding and capacity by reaching out to the different communities within departments and agencies (e.g., finance, human resources) that support deputy heads in implementing Treasury Board policies.

c) People Management

The Treasury Board's people management role is supported by the Secretariat's People Management program activity. The Secretariat provides analysis and recommendations to the Treasury Board to ensure that deputy heads across government have the policies and guidance they need to manage all aspects of human resources within their departments and agencies. This program activity also includes the Secretariat's responsibilities for overseeing collective bargaining, labour relations, and pension and benefits plans.

d) Expenditure Management

Of all the Treasury Board's roles, the budget office is probably the best known. It is supported by two program activities: Expenditure Management and Financial Management. Through the Expenditure Management program activity, the government balances its books each year. The Secretariat provides analysis and support to the President of the Treasury Board to report to Parliament, first on the funding estimated for government operations in a specific year and then on the amounts actually expended. The Expenditure Management program activity also includes the Secretariat's responsibility for managing public sector compensation (i.e., the costs of pay and benefits), as well as its role in reviewing, analyzing, and challenging departmental spending proposals to ensure a focus on results and values for Canadians.

e) Financial Management

The Financial Management program activity is the other aspect of the budget office function. Through this program activity, the Secretariat develops policies and guidance to ensure that the financial management community across government has the right direction to carry out its financial responsibilities. The quality of financial management across departments is important for maintaining the accuracy and integrity of the government's financial records and accounts. This program activity also includes the Secretariat's efforts to build capacity within the financial and audit communities, as well as its audit responsibilities.

f) Internal Services

The Secretariat must implement Treasury Board policies to ensure the smooth running of its internal operations. Efforts in this area are captured in the Internal Services program activity. These include support functions such as communications, financial and human resources management, real property, information technology, and procurement. These services support all the Secretariat's other program activities.

2. Summary of Significant Accounting Policies

These financial statements have been prepared in accordance with the following Treasury Board accounting policies, which are based on Canadian generally accepted accounting principles for the public sector. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian generally accepted accounting principles.

Significant accounting policies are as follows:

a) Parliamentary authorities

The Secretariat is financed by the Government of Canada through parliamentary authorities. Financial reporting of authorities provided to the Secretariat do not parallel financial reporting according to generally accepted accounting principles since authorities are primarily based on cash flow requirements. Consequently, items recognized in the Statement of Operations and the Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 3 provides a reconciliation between the bases of reporting. The planned result amounts in the Statement of Operations are the amounts reported in the future-oriented financial statements included in the 2010–11 Report on Plans and Priorities.

b) Net cash provided by government

The Secretariat operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the Secretariat is deposited to the CRF and all cash disbursements made by the Secretariat are paid from the CRF. The net cash provided by government is the difference between all cash receipts and all cash disbursements including transactions between departments of the government.

c) Amounts due from/to the Consolidated Revenue Funds

Amounts due from/to the Consolidated Revenue Funds (CRFs) are the result of timing differences at year-end between when a transaction affects authorities and when it is processed through the CRF. Amounts due from the CRF represent the net amount of cash that the Secretariat is entitled to draw from the CRF without further appropriations to discharge its liabilities.

d) Revenues

Revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes place.

e) Expenses

Expenses are recorded on the accrual basis:

• Contributions are recognized in the year in which the recipient has met the eligibility criteria or fulfilled the terms of a contractual transfer agreement, provided that the transfer is authorized and a reasonable estimate can be made.
• Vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment.
• Services provided without charge by other government departments for accommodation and legal services are recorded as operating expenses at their estimated cost.

f) Employee future benefits

Pension and other employee benefits:Eligible public service employees participate in the Public Service Pension Plan, a multi-employer pension plan sponsored by the Government of Canada. In its role as employer for the public service, employer contributions to the Plan for all departments and agencies, including additional contributions in respect of any actuarial deficiencies, are funded via centrally managed funds, by the Secretariat and they are expensed in the year incurred. The Secretariat recovers a portion of the employer contributions to the Public Service Pension Plan from other departments and agencies.

Eligible employees of the Secretariat also participate in the Public Service Pension Plan, and the Secretariat's financial reporting responsibility in respect of its own employees' participation in the Plan is limited to its employer contributions.

The Government of Canada also sponsors a variety of other current and future employee benefit plans that the Secretariat is responsible to administer and/or fund through its centrally managed funds. Benefit payments for these plans are recognized as expenses when they become due and no accruals are recorded for future benefits. A portion of these benefits is also recovered from other departments and agencies. This accounting treatment corresponds to the funding provided to the Secretariat through parliamentary appropriations.

For all pension and other employee future benefits, the actuarial liabilities and related disclosures, as well as actuarial surpluses or deficiencies for the whole of government are recognized in the financial statements of the Government of Canada, which ultimately bears actuarial and investment risks inherent to these defined benefit plans as the plans' sponsor.

Severance benefits: Employees are entitled to severance benefits under labour contracts or conditions of employment. These benefits are accrued as employees render the services necessary to earn them. The obligation relating to the benefits earned by employees is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government of Canada as a whole.

g) Accounts and loans receivables

Accounts and loans receivables are stated at the lower of cost and net recoverable value; a valuation allowance would be recorded for receivables where recovery is considered uncertain.

h) Contingent liabilities

Contingent liabilities are potential liabilities that may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur or fail to occur and that a reasonable estimate of the loss can be made, an estimated liability is accrued, and an expense is recorded. If the likelihood is not determinable or an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.

i) Tangible capital assets

All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. The Secretariat does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value.

Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset as follows:

Asset Class	Amortization Period
Computer hardware	3 years
Computer software	3 to 10 years
Machinery and equipment	3 to 10 years
Motor vehicles	3 years
Leasehold improvements	Lesser of the remaining term of the lease or useful life of the improvement

Assets under construction are recorded in the applicable capital asset class in the year that they become available for use and are not amortized until they become available for use.

j) Measurement uncertainty

The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in the financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. The most significant items where estimates are used are contingent liabilities, the liability for employee severance benefits and the useful life of tangible capital assets. Actual results could significantly differ from those estimated. Management's estimates are reviewed periodically, and as adjustments become necessary, they are recorded in the financial statements in the year they become known.

3. Parliamentary authorities

The Secretariat receives most of its funding through annual parliamentary authorities. Items recognized in the Statement of Operations and the Statement of Financial Position in one year may be funded through parliamentary authorities in a prior, current or future year. Accordingly, the Secretariat has different net results of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables:

a) Reconciliation of net cost of operations to current year authorities used

	2011	2010
	($ thousands)
Net cost of operations	2,256,865	2,351,139
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets	(3,302)	(3,341)
Services provided without charge by other government departments	(25,129)	(23,839)
Decrease (increase) in vacation pay and compensatory leave	1,044	(3,590)
(Increase) in employee future benefits	(2,904)	(7,238)
Refund of prior years' expenditures	10,711	1,092
Revenue not available for spending	11,746	12,534
Other	1,634	12,946
Subtotal	(6,200)	(11,436)
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisitions of tangible capital assets	3,693	1,263
Advances	(378)	591
Subtotal	3,315	1,854
Current year authorities used	2,253,980	2,341,557

b) Authorities provided and used

	2011	2010
	($ thousands)
Authorities provided
Vote 1—Operating expenditures	262,656	263,987
Vote 5—Government contingencies	230,668	712,117
Vote 10—Government-wide initiatives	6,563	7,511
Vote 20—Public service insurance	2,223,794	2,164,302
Vote 25—Operating budget carry forward	128,041	481,554
Vote 30—Pay list requirements	175,324	4,543
Vote 35—Budget implementation initiatives	0	883,489
Subtotal	3,027,046	4,517,503
Statutory authorities:
Contributions to employee benefit plans	30,466	31,286
Unallocated employer contributions made under the Public Service Superannuation Act and other retirement acts, and the Employment Insurance Act	6,200	6,471
Payments for the pay equity settlement pursuant to section 30 of the Crown Liability and Proceedings Act	(470)	(517)
President of the Treasury Board - salary and car allowance	78	78
Spending of proceeds from the disposal of surplus crown assets	1	24
Subtotal	36,275	37,342
Less
Lapsed authorities:
Vote 1—Operating expenditures	(7,697)	(21,901)
Vote 5—Government contingencies	(230,668)	(712,117)
Vote 10—Government-wide initiatives	(6,563)	(7,511)
Vote 20—Public service insurance	(261,047)	(102,152)
Vote 25—Operating budget carry forward	(128,041)	(481,554)
Vote 30—Pay list requirements	(175,324)	(4,543)
Vote 35—Budget implementation initiatives	0	(883,489)
Spending of proceeds from the disposal of surplus crown assets	(1)	(21)
Sub Total	(809,341)	(2,213,288)
Current year authorities used	2,253,980	2,341,557

4. Accounts Receivable and Advances

The following table presents details of the Secretariat accounts receivable and advance balances:

	2011	2010
	($ thousands)
Receivables from other government departments and agencies	350,669	657,819
Advances to external parties	639	1,054
Receivables from external parties	1,994	473
Advances to employees	78	105
Deposits in transit to the Receiver General	5	3
Total accounts receivable and advances	353,385	659,454

The bulk of receivables from other government departments and agencies are related to receivables established as a result of employee benefit plans. These receivables have decreased as a result of a reduced variance between planned benefits recovered during the year from other government departments and actual year-end benefits expense.

The increase in receivables from external parties is largely due to litigation.

5. Tangible Capital Assets

The following table presents the details of tangible capital assets:

	Cost					Accumulated Amortization					Net Book Value
Capital asset class	Opening balance	Transfer of assets	Acquisitions	Disposals and writeoffs	Closing balance	Opening balance	Transfer of assets	Amortization	Disposals and writeoffs	Closing balance	2011	2010
	($ thousands)					($ thousands)					($ thousands)
Machinery and equipment	382	0	0	0	382	281	0	32	0	313	69	101
Motor vehicles	125	26	0	0	151	52	1	41	0	94	57	73
Leasehold improvements	1,952	0	0	0	1,952	1,952	0	0	0	1,952	0	0
Computer hardware	9,980	212	3,693	(320)	13,565	6,963	108	1,787	(320)	8,538	5,027	3,017
Computer software	14,661	0	0	0	14,661	3,130	0	1,442	0	4,572	10,089	11,531
Assets under construction	0	0	0	0	0	0	0	0	0	0	0	0
Total	27,100	238	3,693	(320)	30,711	12,378	109	3,302	(320)	15,469	15,242	14,722

Effective April 30, 2010, the Secretariat received Informatics Hardware with a net book value of $104 thousand from the Department of Finance Canada.

Effective June 04, 2010, the Secretariat received a motor vehicle with a net book value of $25 thousand from Foreign Affairs and International Trade Canada as a result of a change in the minister appointed as the President of the Treasury Board.

6. Accounts Payable and Accrued Liabilities

The following table presents the details of the Secretariat accounts payable and accrued liabilities:

	2011	2010
	($ thousands)
Accounts payable to other government departments and agencies	340,182	321,929
Accounts payable to external parties	9,400	14,729
Total accounts payable	349,582	336,658
Accrued liabilities	180,761	230,117
Total accounts payable and accrued liabilities	530,343	566,775

7. Employee Future Benefits

a) Pension benefits for Secretariat employees

The Secretariat's own employees participate in the Public Service Pension Plan, which is sponsored and administered by the government. Pension benefits accrue up to a maximum period of 35 years at a rate of 2 per cent per year of pensionable service times the average of the best five consecutive years of earnings. The benefits are integrated with the Canada/Québec Pension Plan benefits and are indexed to inflation.

Employees and the Secretariat both contribute to the cost of the Plan. The 2010–11 employer expense amounts to $21,387 thousand ($22,589 thousand in 2009–10) in respect of its own employees, which represents approximately 1.9 times (1.9 times in 2009–10) the contributions by employees.

b) Severance benefits

The Secretariat provides severance benefits to its employees based on eligibility, years of service and final salary. These severance benefits are not pre-funded. Benefits will be paid from future authorities. Information about the severance benefits, measured as at March 31, is as follows:

	2011	2010
	($ thousands)
Accrued benefit obligation, beginning of year	36,126	28,888
Expense for the year	6,676	1,070
Benefits paid during the year	(3,772)	(3,935)
Transferred from other government department, effective April 1, 2009	0	10,103
Accrued benefit obligation, end of year	39,030	36,126

8. Contingent Liabilities

Claims and litigations

Claims have been made against the Secretariat in the normal course of operations. These claims include items with pleading amounts and others for which no amount is specified. Based on the Secretariat's assessment, legal proceedings for claims estimated at $65 billion ($67 billion in 2009–10) were pending at March 31, 2011. Some of these potential liabilities may become actual liabilities when one or more future events occur, or fail to occur. To the extent that the future event is likely to occur, or fail to occur, and that a reasonable estimate of the loss can be made, an estimated liability is accrued, and an expense is recorded in the financial statements. No accrual for these contingent liabilities has been made in these financial statements.

The most significant of these legal actions is described as follows:

In September 1999, the Public Sector Pension Investment Board Act (Bill C-78) was passed by Parliament, providing for improvements in the financial management of federal public service pension plans, including the public service, RCMP, and Canadian Forces superannuation plans. The new Act authorized the President of the Treasury Board to debit the accounts in order to reduce the amount of certain excess balances in the superannuation accounts. In late 1999, the major public service unions and pensioner associations launched three lawsuits against the Crown challenging the validity of the legislation. On November 20, 2007, the plaintiffs' actions were dismissed. In February 2008, all three plaintiffs appealed the decisions to the Ontario Court of Appeal. The appeal was heard in April 2010. On October 8, 2010, the Ontario Court of Appeal dismissed the plaintiffs' appeal. The plaintiffs applied for leave to appeal to the Supreme Court of Canada, which granted leave to appeal on May 5, 2011. No date has been set for the hearing.

9. Contractual Obligations

The nature of the Secretariat's activities can result in some large multi-year contracts and obligations whereby the Secretariat will be obligated to make future payments when the services or goods are received. Significant contractual obligations that can be reasonably estimated are summarized as follows:

	2012	2013	2014	2015	2016 and Thereafter	Total
	($ thousands)
Public service health and dental plans	35,558	28,263	31,361	27,407	41,800	164,389
Other professional services	8,684	210	59	59	59	9,071
Management consulting	3,163	32	0	0	0	3,195
Computer services	776	203	27	27	0	1,033
Total	48,181	28,708	31,447	27,493	41,859	177,688

10. Related-Party Transactions

The Secretariat is related as a result of common ownership to all government departments, agencies and Crown corporations. The Secretariat enters into transactions with these entities in the normal course of business and on normal trade terms. In addition, the Secretariat has the responsibility to administer on behalf of other government departments and fund the employer's contribution to the public health and dental insurance plans through its centrally managed funds. During the year, the Secretariat received and provided common services as disclosed below.

a) Common services provided without charge by other government departments

During the year, the Secretariat received services without charge from certain common service organizations, related to accommodation and legal services. These services provided without charge have been recorded in the department's Statement of Operations as follows:

	2011	2010
	($ thousands)
Accommodation	19,734	19,263
Legal services	5,395	4,576
Total	25,129	23,839

The government has centralized some of its administrative activities for purposes of efficiency, cost-effectiveness and economic delivery of programs to the public. As a result, the government uses central agencies and common service organizations so that one department performs services for all other departments and agencies without charge. The costs of these services, such as the payroll and cheque issuance services provided by Public Works and Government Services Canada, are not included in the department's Statement of Operations.

b) Common services provided without charge to other government departments

The Secretariat provided services without charge to other government departments, related to the provision of the employer's contribution to the health, dental and other employee insurance plans and payroll benefits in the amount of $1,828,978 thousand in 2010–11 (compared with $1,697,620 thousand in 2009–10).

c) Other transactions with related parties

	2011	2010
	($ thousands)
Accounts receivable from other government departments and agencies	350,669	657,819
Accounts payable to other government departments and agencies	340,182	321,929
Expenses – Other government departments and agencies	23,423	21,105
Revenues – Other government departments and agencies	5,495	4,772

11. Segmented Information

a) Presentation by segment is based on the Secretariat's program activity architecture. The presentation by segment is based on the same accounting policies described in Note 2, Summary of Significant Accounting Policies. The following table presents the expenses incurred and the revenues generated for the main program activities, by major object of expenses and by major type of revenues. The segment results for the 2010–11 period are as follows:

	GF and PSEP	MF	PM	EM	FM	IS	2011 Total	2010 Total
	($ thousands)
Legend: GF and PSEP – Government-Wide Funds and Public Service Employer Payments MF – Management Framework PM – People Management EM – Expenditure Management FM – Financial Management IS – Internal Services
Transfer Payment
Industry	0	53	0	0	200	0	253	220
Total Transfer Payment	0	53	0	0	200	0	253	220
Operating Expenses
Government-wide funds and public service employer payments	1,959,769	0	0	0	0	0	1,959,769	2,067,613
Salary and employee benefits	0	56,746	52,017	29,076	19,708	59,198	216,745	212,981
Professional and special services	0	8,295	10,663	1,637	9,098	21,570	51,263	47,675
Accommodation	0	4,539	4,539	2,368	1,579	6,709	19,734	19,263
Transport and telecommunications	0	862	1,123	116	360	3,250	5,711	5,795
Machinery, equipment, parts and tools	0	282	822	73	128	4,970	6,275	4,698
Repair and maintenance	0	100	22	8	98	2,174	2,402	1,354
Utilities, materiel and supplies	0	284	379	109	140	886	1,798	1,921
Information	0	63	270	82	27	342	784	1,033
Rentals	0	209	373	50	108	411	1,151	1,312
Amortization	0	21	22	0	0	3,259	3,302	3,341
Other expenses	0	189	3,772	21	6	13	4,001	380
Total Operating Expenses	1,959,769	71,590	74,002	33,540	31,252	102,782	2,272,935	2,367,366
Total Expenses	1,959,769	71,643	74,002	33,540	31,452	102,782	2,273,188	2,367,586
Revenues
Parking fees – Government-wide	10,672	0	0	0	0	0	10,672	11,595
recovery of pension administration costs	0	0	5,495	0	0	0	5,495	4,772
Other	42	0	97	0	0	17	156	80
Total Revenues	10,714	0	5,592	0	0	17	16,323	16,447
Net Cost of Operations	1,949,055	71,643	68,410	33,540	31,452	102,765	2,256,865	2,351,139

b) Centrally managed funds

The Government of Canada sponsors defined benefit pension plans covering most of its employees. The Secretariat is responsible for program administration and for making contribution payments related to the Public Service Pension Plan and the Retirement Compensation Arrangement, including actuarial deficiency contribution payments, from a centrally managed fund.

The Secretariat also funds payments to, or in respect of, the following:

• Employer's share of contributions to the Public Service Death Benefit Account;
• Employer's share of Canada/Québec Pension Plan contributions and Employment Insurance premiums;
• Employer's share of health, disability, and life insurance premiums and related Quebec sales tax;
• Employer's share of the Québec Parental Insurance Plan premium;
• Claims and related costs under the Public Service Dental Care Plan and the Pensioners' Dental Services Plan;
• Provincial payroll taxes;
• Pension, benefit and insurance plans for employees engaged locally outside Canada by Canadian missions abroad; and
• Returns to certain employees of their share of the Employment Insurance premium reduction.

Generally, Public Service Pension Plan contributions, Public Service Death Benefit Account contributions, Canada/Québec Pension Plan contributions, and Employment Insurance premiums are recovered from all departments, agencies and revolving funds pro rata, based on salaries and wages incurred. Contributions to health care plans are recovered from certain departments and agencies and all revolving funds, based on 8.5 per cent (8.5 per cent in 2009–10) of salaries and wages incurred.

Expenses have decreased in a number of plans from 2010 to 2011. This is the result of a one time increase in 2010 related to the introduction of the Public Service Health Care Plan benefit card and the signing of a number of collective bargaining agreements resulting in retroactive pay, and is not an indication of future trends.

A breakdown by major category is as follows:

	2011	2010
	($ thousands)
Expenses
Public Service Pension Plan and Retirement Compensation Arrangement contributions (Statutory)	2,669,956	2,687,405
Public Service Health Care Plan (Vote 20)	865,819	909,815
Canada/Québec Pension Plan contributions (Statutory)	634,762	666,590
Provincial payroll taxes (Vote 20)	509,187	524,764
Group disability and life insurance (Vote 20)	432,887	472,401
Employment Insurance premiums (Statutory)	272,083	274,641
Public Service Dental Care Plan (Vote 20)	258,821	269,608
Pensioners’ Dental Services Plan (Vote 20)	129,135	122,031
Pension and other government employee benefits in respect of locally engaged staff employed in Canadian missions abroad (Vote 20)	55,646	50,330
Provincial Health Insurance Plan premiums (Vote 20)	31,452	31,068
Québec Parental Insurance Plan premiums (Vote 20)	32,181	32,333
Public Service Death Benefit Account contributions (Statutory)	12,083	11,582
Public Service Pension Plan and Retirement Compensation Arrangement contributions in respect of actuarial deficits (Statutory)	6,200	6,200
Operating expenses (Vote 20)	5,627	5,584
Pension and similar payments to former government employees (Vote 20 and Statutory)	3,626	3,297
Employment Insurance premium reduction (Vote 20)	1,645	1,749
Miscellaneous special payments (Statutory)	(470)	(517)
Total Expenses	5,920,640	6,068,881
Recoveries
Employer’s contributions to government employee benefit plans recovered from government departments and agencies (Statutory)	3,588,885	3,639,946
Employer’s contributions to government employee insurance plans recovered from government departments and agencies (Vote 20)	174,059	177,942
Employee’s contributions to the Public Service Health Care Plan recovered from government departments and other organizations (Vote 20)	136,419	132,159
Pensioners’ contributions to the Pensioners’ Dental Services Plan (Vote 20)	61,508	51,221
Total Recoveries	3,960,871	4,001,268
Net Expenses	1,959,769	2,067,613

12. Adoption of New Accounting Policies

During the year, the Secretariat adopted the revised Treasury Board Accounting Standard 1.2 – Departmental and Agency Financial Statements, which is effective for the Secretariat for the 2010–11 fiscal year. The major change in the accounting policies of the Secretariat required by the adoption of the revised TBAS 1.2 is the recording of amounts due from the Consolidated Revenue Fund as an asset on the Statement of Financial Position.

The adoption of the new Treasury Board accounting policies has been accounted for retroactively with the impact on the following comparatives for 2009–10.

Statement of Financial Position	2010 as Previously Stated	Effect of Changes	2010 Restated
	($ thousands)
Assets	674,240	230,748	904,988
Equity of Canada	61,202	230,748	291,950

13. Comparative Information

Comparative figures have been reclassified to conform to the current year's changed program activity presentation.

Appendix A—Secretariat Centrally Managed Votes Under Program Activity 5: Government-Wide Funds and Public Service Employer Payments

The Treasury Board of Canada Secretariat (the Secretariat) centrally manages Votes to perform its statutory responsibilities for managing the government's financial, human and materiel resources. Planned spending in the Secretariat's Program Activity 5: Government-Wide Funds and Public Service Employer Payments relates mainly to the following Vote:

Vote 20—Public Service Insurance

This Vote, which supports the Treasury Board's role as employer, is used for the following:

• Public service pension, benefit and insurance plans, including payment of the employer's share of health, income maintenance and life insurance premiums;
• Payments to or in respect of provincial health insurance plans;
• Payment of provincial payroll taxes and Québec sales tax on insurance premiums;
• Costs associated with the pension, benefit and insurance plans for employees engaged locally outside Canada; and
• The return to certain employees of their share of the employment insurance premium reduction.

Other contingency funds are available to other government departments, if required, and expenditures will be identified under their program activities. The following Votes are therefore excluded from the Secretariat's planned spending:

Vote 5—Government Contingencies

This Vote provides the government with the authority and flexibility to meet unforeseen or urgent expenditures until parliamentary approval can be obtained. Most of the items in this Vote are considered temporary advances to cover items that will be included in subsequent Supplementary Estimates for other departments and agencies, and reimbursed when the associated appropriation Act is passed.

Vote 10—Government-Wide Initiatives

This Vote supplements other departments and agencies' appropriations that support the implementation of strategic management initiatives across the public service. Historically, this Vote has been used to support such initiatives as Government Online, comptrollership innovation and modernization, the Financial Information Strategy, employment equity and program evaluation and internal audit.

Vote 15—Compensation Adjustments

This Vote supplements other appropriations to provide funding for the increased personnel costs of the collective agreements between the Treasury Board and the collective bargaining units representing public service employees, as well as the collective agreements signed by separate employers. These include members of the Royal Canadian Mounted Police and the Canadian Forces, Governor-in-Council appointees and Crown corporations as defined in section 83 of the Financial Administration Act.  

Vote 25—Operating Budget Carry Forward

This Vote allows for routine operating budget carry-forward (OBCF) amounts, as established under the OBCF policy, to be transferred directly to departments and agencies, in a timely manner, once eligible amounts have been confirmed by the Secretariat and approved by Treasury Board ministers.

Vote 30—Paylist Requirements

This Vote covers departments and agencies' paylist shortfalls related to parental benefits, severance and other allowances. To avoid discrimination in hiring practices, paylist costs related to these expenditures have been provided for centrally since the introduction of the operating budget regime in 1993. This Vote provides relief from the cash management challenges that departments and agencies face for these legal obligations.

Annex to the Statement of Management Responsibility
Including Internal Control over Financial Reporting
Treasury Board of Canada Secretariat
Fiscal year 2010–11

Note to the Reader

The Treasury Board Policy on Internal Control,effective April 1, 2009, requires departments to demonstrate the measures they are taking to maintain effective systems of internal control over financial reporting (ICFR).

As part of this policy, departments are expected to conduct annual assessments of their system of ICFR, establish action plan(s) to address any necessaryadjustments, and attach to their Statements of Management Responsibility a summary of their assessment results and action plan.

Effective systems of ICFR aim to achieve reliable financial statements and to provide assurances that:

• Transactions are appropriately authorized;
• Financial records are properly maintained;
• Assets are safeguarded; and
• Applicable laws, regulations and policies are followed.

It is important to note that the system of ICFR is not designed to eliminate all risks, rather to mitigate risk to a reasonable level with controls that are balanced with, and proportionate to, the risks they aim to mitigate.

The maintenance of an effective system of ICFR is an ongoing process designed to identify, assess the effectiveness of and adjust, as required, key risks and associated key controls, as well as to monitor its performance in support of continuous improvement. As a result, the scope, pace and status of those departmental assessments of the effectiveness of their system of ICFR will vary from one organization to the other based on risks and taking into account their unique circumstances.

---

Table of Contents

• 1. Introduction
  • 1.1 Authority, mandate and program activities
  • 1.2 Financial highlights
  • 1.3 Assessment Results
  • 1.4 Material changes in fiscal year 2010–11
• 2. Control Environment of the Secretariat Relevant to ICFR
  • 2.1 Key positions, roles and responsibilities
  • 2.2 Key organization-wide controls in the Secretariat
• 3. Assessment of the Secretariat System of ICFR
  • 3.1 Assessment approach
  • 3.2 Assessment scope
• 4. Assessment ResultsDesign effectiveness of key controls
  • 4.1 Design effectiveness of key controls
  • 4.2 Operating effectiveness of key controls
• 5. Action Plan
  • 5.1 Progress in 2011
  • 5.2 Future years

  ---

1. Introduction

This document is the annex to the Treasury Board of Canada Secretariat's (the Secretariat's)Statement of Management Responsibility Including Internal Control over Financial Reporting for the fiscal year 2010–11. It is the second annex prepared by the Secretariatfollowing on the one prepared in 2009–10. As required by the Treasury Board Policy on Internal Control, effective April 1, 2009, this document provides summary information on the measures taken by the Secretariat to maintain an effective system of internal control over financial reporting (ICFR). In particular, it provides summary information on the internal control assessments conducted by the Secretariat as at March 31, 2011, including progress, results and related action plans along with some financial highlights pertinent to understanding the control environment unique to the Secretariat.

1.1  Authority, mandate and program activities

The Secretariat is the administrative arm of the Treasury Board. The Treasury Board is a Cabinet committee of ministers invested with a broad range of responsibilities for management excellence, policy development, and budget and human resources oversight. The Secretariat supports Treasury Board ministers and strengthens the way government is managed to better serve Canadians and ensure value for money in government spending. The Secretariat achieves these objectives by:

1. Fulfilling its responsibilities as a department and central agency of the federal government; and
2. Making central payments and receiving revenues as the employer for the government-wide public service pension and benefits.

While both of these roles are important, the overwhelming majority of the expenditures, in these financial statements, relate to the central payments for the pension and benefits.

Detailed information on the Secretariat's authority, mandate and program activities can be found in its Departmental Performance Report and Report on Plans and Priorities.

1.2 Financial highlights

The financial statements (unaudited) of the Secretariat for fiscal year 2010–11 can be found on the Secretariat's website. Information can also be found on the Public Accounts of Canada website.

Financial highlights of the Secretariat:

• Government-wide funds and public service employer payments accounted for 86 per cent or $1.959 billion of total expenses ($2.273 billion). Public Service Employer Payments relate to the Secretariat's role as employer of the core public administration. These funds are used for the public service pension, benefits and insurance, including payment of the employer's share of health, dental, income maintenance and life insurance premiums as well as payments to, or in respect of, provincial health insurance and other related costs. The Pension and Benefits Sector within the Secretariat manages most of these expenditures.
• Parking fee revenue was $10.7 million or 66 per cent of total revenues ($16.3 million). These fees are paid by public servants across government for renting parking spaces in government-owned or -leased facilities. Public Works and Government Services Canada (PWGSC) revised its Custodial Parking Policy in February 2010, which requires public servants to arrange for their own parking and to pay parking fees directly to the parking lot operator. The change to the policy is being implemented on a site-by-site basis, so the parking fee revenue recorded by the Secretariat will continue to decline over the next several years. The Secretariat continues to fulfill a central accounting function by recording all parking fees deposited by other government departments. These fees are deposited directly to the Consolidated Revenue Fund and are not available for re-spending by the Secretariat.
• Accounts receivable related to other departments' shares of employee benefit costs account for 64 per cent or $319 million of total assets ($497 million). Also, accounts payable that relate to adjustments for other departments' share of employee benefit costs comprise 54 per cent or $312 million of total liabilities ($578 million). In addition, 28 per cent or $162 million of total liabilities ($578 million) are for year-end payables set up for the Public Service Health Care Plan, the Public Service Dental Care Plan and the Pensioners' Dental Services Plan. These significant payables and receivables result from the requirement for year-end adjustments to ensure the appropriate distribution of employee benefit costs to government departments.

1.3 Service arrangements relevant to financial statements

1.3.1 Secretariat reliance on other government service providers

The Secretariat relies on other organizations for the processing of certain transactions that are recorded in its financial statements. These arrangements include, but are not limited to, the following:

Common arrangements:

• PWGSC centrally administers the payments of salaries and benefits, the procurement of some goods and services, as well as the provision of accommodations on behalf of the Secretariat.
• The Department of Justice Canada provides legal services to the Secretariat.

Specific arrangements:

• PWGSC performs the day-to-day administration of the Public Service Pension Plan.
• The Office of The Chief Actuary within the Office of the Superintendent of Financial Institutions prepares a triennial actuarial valuation of the Public Service Pension Plan.
• PWGSC performs the day-to-day administration of some centrally funded expenses such as the employer's share of Canada/Québec Pension Plan contributions, Employment Insurance premiums and provincial payroll taxes. These types of expenses are recorded on the Secretariat's financial statements as government-wide funds and are representative of Secretariat's role as the employer of the public service.

1.3.2 Secretariat reliance on non-governmental service providers

The Secretariat relies on the internal controls of a number of companies that provide specific services such as medical plan administration, dental plan administration and insurance services.

1.3.3 Secretariat services upon which other departments rely

Other government departments rely on the Secretariat for the processing of certain transactions or the provision of information, which impacts their financial statements.

Common arrangements:

• The Office of the Comptroller General within the Secretariat provides all departments with a percentage ratio to be used when calculating their severance pay liability for purposes of their departmental financial statements.
• The Secretariat provides all departments with a percentage amount, which allows them to calculate an annual dollar figure for the services they receive without charge for the insurance benefit plans that are funded centrally.
• The Secretariat provides all departments with details regarding the required calculation to determine the employer share of Employee Benefit Plans (EBP). EBP includes costs to the government for the employer's matching contributions and payments to the Public Service Superannuation Plan, the Canada/Québec Pension Plans, and the Death Benefit and Employment Insurance accounts.

Specific arrangements:  

• The Secretariat provides corporate services to several organizations including the Department of Finance Canada, the Privy Council Office, the Office of the Commissioner of Lobbying of Canada and the Canada School of Public Service.

1.4 Material changes in fiscal year 2010–11

The Program Activity Architecture (PAA) has been restructured to present financial and performance information under six activities instead of the previous four. The change appears in the Report on Plans and Priorities and in the financial statements of the Secretariat, which show the six new activities in 2010–11 as compared with the previous four activities in 2009–10.

2. Control Environment of the Secretariat Relative to ICFR

The Secretariat recognizes the importance of senior management leadership in ensuring that staff at all levels understand their roles in maintaining effective systems of ICFR and are well equipped to exercise these responsibilities. The Secretariat's objective is to continually improve its internal control environment using a risk-based approach and targeted resource investment so that the required level of effectiveness is achieved at a manageable cost.

2.1 Key positions, roles and responsibilities

The following are the Secretariat's key positions and committees with responsibilities for maintaining and reviewing the effectiveness of its system of ICFR.

Secretary—The Secretariat's Deputy Head, as Accounting Officer, assumes overall responsibility and leadership for the measures taken to maintain an effective system of internal control. In this role, the Secretary chairs the Secretariat Executive Committee and is a member of the Departmental Audit Committee.

Chief Financial Officer (CFO)—The Secretariat's CFO reports directly to the Secretary and provides leadership for the coordination, coherence and focus on the design and maintenance of an effective and integrated system of ICFR, including its annual assessment.

Assistant secretaries and other senior departmental managers—The Secretariat's senior departmental managers in charge of program delivery are responsible for maintaining and reviewing the effectiveness of the system of ICFR falling within their mandate.

Chief Audit Executive (CAE)—The Secretariat's CAE reports directly to the Secretary and provides assurance through periodic internal audits, which are instrumental to the maintenance of an effective system of ICFR.

Government of Canada Audit Committee (GCAC)—The GCAC is an advisory committee that provides objective views on the Secretariat's financial statements, risk management, control and governance frameworks; it comprises three members external to government, a deputy minister external to the Secretariat, and the Secretary of the Treasury Board. As such, it reviews the Secretariat's Corporate Risk Profile, its internal audit reports, and its system of internal control, including the assessment and action plans relating to the system of ICFR.  

2.2 Key organization-wide controls in the Secretariat

The Secretariat's control environment includes measures and tools to help raise awareness and to develop employees' internal control knowledge and skill sets. These include the following:

• Values and Ethics Office, which provides educational and awareness programs; 
• A Secretariat Corporate Risk Profile that is updated annually;
• A requirement for accounting designations in key financial management positions, as well as a section within the Financial Management Directorate focused on ICFR;
• Financial management policies as well as documentation of its main business processes and related key risk and control points to support the management and oversight of its system of ICFR;
• A risk-based internal audit plan;
• Training programs and regular communication to employees on core areas of financial and contracting management;
• Regularly updated delegated authorities matrix; and
• Secure financial and contracting information technology (IT) processing systems to achieve enhanced security, data integrity, and efficiency and effectiveness of transactions.

3. Assessment of the Secretariat System of ICFR

3.1 Assessment approach

In support of the Policy on Internal Control, an effective system of ICFR has the objective to provide reasonable assurance that:

• Transactions are appropriately authorized;
• Financial records are properly maintained;
• Assets are safeguarded; and
• Applicable laws, regulations and policies are followed.

Over time, this includes assessment of design and operating effectiveness of the departmental system of ICFR leading to ensuring the ongoing monitoring and continuous improvement of its departmental system of ICFR.

Design effectiveness means to ensure that key control points are identified, documented and in place, that they are aligned with the risks (i.e., controls are balanced with and proportionate to the risks they aim to mitigate) and that any remediation is addressed. This includes the mapping of key processes and IT systems to the main accounts.

Operating effectiveness means that the application of key controls has been tested over a defined period and that any required remediation is addressed. Such testing covers all departmental control levels that include corporate or entity, general computer and business process controls.

In the second fiscal year since the introduction of the Policy on Internal Control, the Secretariat continued to improve its approach to assessing internal controls. It introduced a risk-based approach to assessing internal controls over financial reporting. This approach involves identifying accounts in the annual financial statements where a material error could impact the decision making of a reader of the departmental financial statements and assessing the potential for fraud, the complexity and volume of transactions, and sensitivity on an account-by-account basis. All accounts are grouped into financial statement categories such as assets, liabilities, government-wide expenses, operating expenses and revenues. For each category, a materiality threshold is calculated based on 1 per cent of annual dollar value.

While this risk-based approach was introduced in 2010–11, its implementation is still in progress and will evolve and be expanded upon in future years. The approach led to a focus on assessing the two largest programs impacting the financial statements of the Secretariat: the Public Service Pension Plan and the Public Service Health Care Plan.

As part of its annual assessment, the Secretariat completed the following:

• Reviewed existing documentation from internal sources and external sources (e.g., other departments, insurance companies) as part of the ongoing assessment of evolving internal controls design;
• Conducted meetings internally with key program managers to discuss internal controls and also met with external stakeholders (e.g., other departments, insurance companies);
• Initiated business process mapping, which included detailed flowcharts for the Public Service Pension Plan, the Public Service Health Care Plan, the Disability Insurance Plan and the Public Service Dental Care Plan; and
• Conducted reviews of the Secretariat's activities related to the Public Service Pension Plan to ensure internal controls were effectively designed and to identify any weaknesses and recommend corrective action, where applicable.

The Secretariat also took into account information from relevant audits and assessments, in particular, the following internal audit reports:

• Audit of Account Verification
• Audit of the Management of the Public Service Disability Insurance Plan
• Audit of Acquisition Cards

3.2 Assessment scope

The business processes within the Secretariat are grouped into two categories: 1) those that concern the Secretariat as a department and 2) those that concern the Secretariat in its role of managing government-wide funds and public service employer payments.

Business processes for the Secretariat as a department are as follows:

• Operating Expenses including contracting
• Payroll and Benefits
• General Computer Controls
• Financial Reporting and Closing Cycle
• Budgeting and Forecasting

Business processes for the Secretariat as the manager for government-wide funds and public service employer payments are as follows:

• Pension Payments
• Insurance Benefit Plans
• Employee Benefit Plan Recoveries
• Parking Revenue

In 2009–10, the Secretariat focused its efforts on internal control over business processes associated with programs that it managed as a department. The Secretariat based its results on an earlier assessment of audit readiness made by an independent external consulting firm. In 2010–11, the Secretariat focused on business processes associated with its role as the manager of government-wide funds and public service employer payments. The assessment of internal controls for the Public Service Pension Plan, the Public Service Health Care Plan, the Disability Insurance Plan and the Public Service Dental Care Plan began during 2010–11 and will continue into 2011–12. The assessment of the control activities involved the gathering of documents specific to each program, discussion with various stakeholders, and analysis of the risks and related controls.

4. Assessment Results

In assessing its key controls in sub-processes regarding the government-wide pension and employee benefit plans, the Secretariat looked at design effectiveness and initiated corrective action.

4.1 Design effectiveness of key controls

When completing design effectiveness testing, the Secretariat updated business process documentation and validated the key processes with management. It verified that the documented processes corresponded to actual practices, and adjustments were made to documentation and/or the actual process, as required. In addition, management action plans related to internal audits were reviewed to determine what actions had been completed. As a result of these assessments, the Secretariat identified the need for remediation as follows:

Governance and oversight:

• Increased focus within the Financial Management Directorate dedicated to its financial management oversight role for public service pension and benefit plans;
• Improved documentation of governance structures in the Pension and Benefits Sector, and clarification of roles and responsibilities;

Information and communication:

• Enhanced communication and information sharing between the Financial Management Directorate and those senior managers with internal control responsibilities to ensure a common understanding of roles;
• Additional emphasis on knowledge transfer to ensure knowledge is not lost when key individuals leave the department;

Financial planning:

• Increased quality and quantity of financial and non-financial supporting documentation related to the insurance benefit programs and subsequent analysis;

Documentation of controls and evidence of controls:

• Greater consistency, accuracy and detail in the documentation of controls and procedures and business processes, such as pension and benefit processes and acquisition card procedures;
• Additional focus on internal control issues related to reliance on other government departments and other external service providers;
• Implementation of additional tools and procedures to demonstrate evidence of control;
• More consistent identification of actions taken in response to recommendations from audits or reviews;

Accounting:

• Improved consistency and frequency in the completion of  reconciliations; and
• Clarification of the accounting treatment of revenues versus cost recoveries in the financial statements.

4.2 Operating effectiveness of key controls

In 2010–11, the Secretariat focused on design effectiveness for public service pension and benefits, and this will continue in 2011–12. The Secretariat has completed its review of the operation of the design effectiveness for departmental business processes and has begun this review for public service pension and benefits processes.

5. Action Plan

Efforts in 2011 focused on ensuring departmental operations could sustain a controls-based audit and on furthering documentation of government-wide funds. For future years, the Secretariat will focus on the various pension and insurance benefit programs it operates and administers. These programs had been reviewed at a higher level during an audit assessment, and issues have been addressed. A more detailed analysis has begun to further document the processes and controls, and assess potential gaps.

5.1 Progress in 2011

During 2010–11, the Secretariat continued to make significant progress in assessing and improving its controls. The following is a summary of the Secretariat's progress:

Overall, the Secretariat completed the following activities that were planned in the 2009–10 annex for ICFR:

• Completed the key elements of a risk-based internal control framework by developing a financial statement breakdown by general ledger account, a preliminary risk assessment and an approach for relating internal controls to the general ledger accounts.
• Advanced awareness of the roles and responsibilities of employees involved in internal control over financial reporting through presentations and through written reports, which included specific recommendations.
• Developed a multi-year monitoring plan with a risk-based focus on specific benefits programs and introduced quarterly monitoring of financial system access and security controls, and regular monitoring of management action plans for internal audits. In addition, the Secretariat reviewed a number of software programs, which will be of assistance in implementing its continuous monitoring program.
• Completed the plan for reviewing public service employer payments.
• Developed a draft departmental financial management framework, which will become a key oversight document for internal control.

As a department, the Secretariat completed as planned:

• The effectiveness testing of departmental processes to verify remediation as recommended by an independent external consulting firm. Remediation action related to Vote 1 processes was completed. The Secretariat is ready to sustain a controls-based audit related to its Vote 1 processes.
• Updated documentation and processes in numerous areas based on effectiveness testing.
• Compared the departmental pay administration processes with the Office of the Comptroller General Pay Administration Model. The analysis indicated one area of follow-up, the implementation of salary commitments in the financial system.
• Addressed the recommendations of an account verification audit by developing risk criteria that will be applied to key transaction types, by strengthening checklists and by developing a monitoring and reporting plan.
• Addressed a key recommendation of an acquisition card audit by establishing a client checklist and by strengthening the account verification process through the requirement for additional supporting documentation for goods and services procurement and the dating of authorization signatures.

As the manager of government-wide funds and public service employer payments, the Secretariat reviewed the processes and control activities for the following programs:

• As planned in the 2009–10 annex, the Public Service Pension Plan business process was documented, internal controls were reviewed and recommendations for improvements were made.
• Significant progress was made in documenting the business processes and internal controls for the insurance benefit plans. The complexity of these plans, however, has required that the remaining work be scheduled over a three-year period beginning in 2011–12. It is anticipated that over 75 per cent of this work will be completed by 2012–13.
• The Public Service Health Care Plan underwent significant changes due to a new contract that became effective in 2009 and that introduced additional internal controls. Business process models governing daily and monthly payments under the new contract were developed. As planned, the documentation of these controls was mostly completed in 2010–11 and will be finalized in 2011–12.
• Initial work on the documentation of internal controls over the Public Service Dental Care Plan began in 2010–11 with work to be finalized in 2011–12.
• A separate in-depth review was conducted of the revenues and expenditures related to the insurance benefit plans, which included a review and assessment of every transaction, an assessment of supporting documentation and identified a series of recommendations including development of written procedures for certification and for document maintenance.
• A set of guidelines and procedures was drafted for separate employers who participate in the health, dental and insurance plans.
• Process mapping and controls assessment for central Votes was substantially completed: Government Contingency, Vote 5; Government-Wide Initiatives, Vote 10; Compensation Adjustments, Vote 15; Operating Budget Carry Forward, Vote 25; and Paylist Requirements, Vote 30.
• In 2010–11, an internal audit of the management control framework for the Disability Insurance Plan was finalized. A key recommendation resulting from the audit was enhancement of the risk identification, assessment and mitigation activities. In response, the Secretariat is reviewing authorities and operational processes; strengthening measures to assess and monitor the plan's performance; implementing a formal risk management process that monitors and mitigates risks in a systematic manner; and developing human resources strategies to recruit and retain individuals with the appropriate skills to administer the plan. In addition, a process mapping and review of the internal controls for this plan was started in 2010–11 and will be finalized in 2011–12.

5.2. Future years

In 2010–11, the Secretariat's focus was the various pension and insurance benefit plans operated by the Secretariat. This will remain its primary focus over the next three years.

By end of 2011–12

Overall, the Secretariat plans to:

• Initiate an internal audit of the process for settling interdepartmental charges.
• Introduce a comprehensive risk-based internal control framework and internal control monitoring plan.
• Promulgate a financial management framework that will identify at a high level the relevant policy instruments, principles, processes and controls in the organization, and clarify roles and responsibilities within the Secretariat.
• Acquire a software tool to assist in the implementation of continuous monitoring.

As a department, the Secretariat plans to:

• Increase the level of business process mapping by detailing other departmental business processes such as the procurement to payment process and the salary and benefits process. This will also provide benefits in terms of identifying process efficiencies, training and knowledge transfer.
• Review and refresh expenditure object codes to ensure the availability of detailed credible information for departmental management and Parliament.
• Promulgate documents relating to the roles and responsibilities, procedures and guidelines for acquisition card management and implement training and monitoring programs.

As the manager of government-wide funds and public service employer payments, the Secretariat plans to:

• Finalize an action plan related to the recommendations resulting from the review of internal controls around the Secretariat's portion of the Public Service Pension Plan management;
• Complete an internal audit of the management control framework for the Public Service Pension Plan;
• Complete the mapping and assessment of the internal controls around the Public Service Health Care Plan;
• Complete the mapping and assessment of the internal controls around the Disability Insurance Plan;
• Continue the mapping and assessment of  the internal controls around the Public Service Dental Care Plan;
• Initiate the mapping and internal controls assessment around the Canada/Québec Pension Plan contributions, provincial payroll taxes and Employment Insurance premiums.

By end of 2012-13

Overall, the Secretariat plans to:

• Implement a risk-based internal controls monitoring program.

• Increase use of techniques and tools (e.g., continuous monitoring) that will also improve the effectiveness and efficiency of internal controls.

As a department, the Secretariat plans to:

• Broaden ongoing operational effectiveness testing to include additional departmental business processes.
• Conduct audits of the Secretariat's risk management framework, IT governance and contracting practices.

As the manager of government-wide funds and public service employer payments, the Secretariat plans to:

• Complete the mapping and assessment of the internal controls around the Public Service Dental Care Plan.
• Complete the mapping and internal controls assessment around the Canada/Québec Pension Plan contributions, provincial payroll taxes and Employment Insurance premiums.
• Initiate the mapping and assessment of internal controls around the Pensioners' Dental Services Plan and the Service Income Security Insurance Plan.
• Initiate the mapping and assessment of the internal controls around the Québec Parental Insurance Plan and the provincial health plans.
• Initiate the mapping and assessment of the internal controls around the Public Service Management Insurance Plan.
• Initiate the mapping and assessment of the internal controls around the TBS Joint Learning Plan and the Supplementary Death Benefit Plan.