Financial Statements for the year ended March 31, 2016

Annex to the Statement of Management Responsibility Including Internal Control over Financial Reporting – Fiscal year 2015-2016

Table of Contents

1. Introduction
2. Departmental system of internal control over financial reporting
3. Departmental assessment results during fiscal year 2015-2016
4. Departmental action plan

1. Introduction

This document provides summary information on the measures taken by Immigration, Refugees and Citizenship Canada (“IRCC” or “the Department”) to maintain an effective system of internal control over financial reporting (ICFR), including information on internal control management and assessment results and related action plans.

Detailed information on IRCC’s authority, mandate, and program activities can be found in its latest Departmental Performance Report and in its most recent Report on Plans and Priorities.

2. Departmental System of Internal Control over Financial Reporting

2.1 Internal Control Management

The department has a well-established governance and accountability structure to support departmental assessment efforts and oversight of its system of internal control. A departmental internal financial control management framework, approved by the Deputy Head, is in place and includes:

• organizational accountability structures as they relate to internal financial control management to support sound financial management and reporting, including roles and responsibilities for senior managers in their areas of responsibility for control management;
• values and ethics, including a departmental code of conduct and a values and ethics champions network led by the Deputy Minister;
• on-going communication and training on statutory requirements, policies, and procedures for sound financial management and control; and,
• at least semi-annual monitoring and regular updates on internal financial control management as well as the reporting of annual assessment results and related action plans to the Deputy Head, departmental senior management and the Departmental Audit Committee.

The Departmental Audit Committee provides advice to the Deputy Head on the adequacy and functioning of the department’s risk management, control and governance frameworks and processes.

IRCC’s senior management recognizes the importance of setting the tone from the top to help ensure that staff at all levels understand their roles in maintaining effective systems of ICFR and are equipped to exercise these responsibilities effectively. The Department’s focus is on ensuring that risks are managed well through a responsive and risk-based control environment that enables continuous improvement and innovation.

2.2 Service Arrangements Relevant to Financial Statements

The Department relies on other organizations for the processing of certain transactions that are recorded in its financial statements as follows:

Common arrangements:

• Public Services and Procurement Canada (PSPC) centrally administers the payments of salaries and the procurement of goods and services, as per the Department’s Delegation of Spending and Financial Authority Instrument, and also provides accommodation services;
• Treasury Board Secretariat provides the Department with information used to calculate various accruals and allowances, such as the accrued severance liability;
• The Department of Justice provides legal services to IRCC; and,
• Shared Services Canada (SSC) provides IT infrastructure services to the Department in the areas of data centre and network services. The scope and responsibilities are addressed in the interdepartmental arrangement between SSC and IRCC.

Specific arrangements:

• The Department of Global Affairs Canada (GAC) provides common administrative services and support for the Immigration Program outside Canada, under a memorandum of understanding with IRCC. Common administrative services include accommodations, revenues and payments processing, accounting and telecommunications. Program support is offered by both Canada-based officers and locally engaged staff in missions abroad. GAC also prepares periodic financial reports for IRCC staff on the revenues collected and the expenses incurred directly in the field;
• The Department of Employment and Social Development Canada (ESDC) provides passport delivery and processing services to IRCC. These services are governed by a service level agreement with IRCC which ensures optimal and sound financial management of the Passport Program and the recovery of costs associated with Passport Service Delivery and Operations, Receiving Agent Services, Transition and Modernization costs and Internal Services provided by Service Canada, an initiative operating within ESDC;
• VFS Global and Computer Sciences Canada Inc. manage visa application centres that deliver visa application intake services and the collection of related application fees abroad. As a result, reliance is placed on the control procedures of these external service providers; and,
• Medavie-Blue Cross provides claims administration for the Interim Federal Health Program (IFHP). The IFHP reimburses service providers for emergency and essential health-care services in cases where eligible clients, such as refugees, do not qualify for provincial, territorial or private health coverage. As a result, reliance is placed on the control procedures of Medavie Blue-Cross.

3. Departmental Assessment Results during Fiscal Year 2015-2016

The key findings and significant adjustments required from the current year’s assessment activities are summarized below.

New or significantly amended key controls: In the current year, IRCC completed its transition to a new integrated revenue management system. It progressed substantially in assessing the design and operating effectiveness of the related amended key controls, and will report on the results of this work in next year’s annex. IRCC also completed its departmental implementation of the Treasury Board Pay Transformation Initiative towards the end of the fiscal year and, in accordance with its ongoing monitoring program, will be assessing any modified key controls within the salaries and benefits business process in 2017-18. There were no significantly amended key controls in all other existing business processes that required a reassessment in 2015-16.

Ongoing monitoring program: IRCC completed its transition to the ongoing monitoring phase of its system of internal control over financial reporting in 2015-16. It finished the initial assessment of the transfer payments to other levels of government business process, including any related remediation, and the implementation of any outstanding management action plans from previous assessments.

As part of its rotational ongoing monitoring program, the Department also completed its reassessment of information technology general controls under departmental management and of the financial controls embedded within the following business processes: budgeting and forecasting, financial closing and reporting, transfer payments to service provider organizations (at NHQ and three Canadian regional offices), services provided without charge by other departments, capital assets, all significant business processes at a Canadian regional office and at two international missions. For the most part, the key controls that were tested performed as intended, with remediation required in the following areas:

• existence of documentary evidence of the application of certain key controls, such as significant reviews, reconciliations and approvals;
• performance of review of certain documents, transactions and reconciliations; and,
• documentation of significant financial procedures and controls.

Management action plans addressing the remediation requirements were developed by the business process owners and several have already been implemented. The remaining action plans will be operationalized within a reasonable timeframe.

Furthermore, in 2015-16, the Department substantially advanced its reassessment of entity-level controls and of the financial controls embedded within the following business processes: salaries and benefits (prior to completion of the Pay Transformation Initiative), revenues at NHQ, all significant business processes at a Canadian case processing centre and at another international mission. This reassessment work will be completed in 2016-17, and its results will be disclosed in next year’s annex.

4. Departmental Action Plan

4.1 Progress during Fiscal Year 2015-16

IRCC began to conduct its ongoing monitoring according to the portion of the rotational plan depicted in the following table:

In 2015-16, in addition to the progress made in ongoing monitoring, the department finished assessing the financial controls within the transfer payments to other levels of government business process, and remediated any related financial control deficiencies. IRCC also followed-up on all financial controls that required enhancements as a result of prior year assessments, and determined that these controls had all been duly strengthened. Furthermore, IRCC made significant progress in assessing the financial controls associated with its recent integrated revenue management system, and the results of this assessment will be disclosed in next year’s annex.

4.2 Action Plan for the Next Fiscal Year and Subsequent Years

IRCC’s rotational ongoing monitoring plan over the next three years, subject to an annual revalidation of the high risk processes and controls and related adjustments to the plan as required, is shown in the following table:

In addition to the ongoing monitoring rotational plan, IRCC plans to continue addressing any outstanding remediation resulting from its reassessments of the financial controls in place.