Monday, June 17, 2024

The Standing Committee on Audit and Oversight has the honour to present its

TWELFTH REPORT

Your committee, which for the purposes of integrity, independence, transparency and accountability, is authorized under rule 12-7(4) to act on its own initiative on certain matters, including retaining the services of internal and external auditors and overseeing such audits, and to report at least annually with observations and recommendations to the Senate, now reports as follows:

As per section 6-5 of the Senate Audit and Oversight Charter, your committee has adopted a three-year risk-based internal audit plan. As the best practices dictate, the plan was drafted following a detailed analysis of key corporate documents as well as a series of consultations with senators and officials from the Senate Administration. Your committee believes that a robust, risk-based internal audit plan will support the institution in maintaining sound and efficient processes towards good governance, risk management and best practice controls. Over time, it will provide the Senate with insight into the optimal use of its resources and the effective mitigation of risks.

Your committee will support the next steps in implementing the risk-based internal audit plan with the aim of ensuring that the work of internal audit is positioned to provide evaluation and analysis on the existence, effectiveness and adequacy of risk management, control and governance processes in the Senate.

For the current fiscal year, your committee has approved the execution of two audits, under the responsibility of the Chief Audit Executive. The first audit is a review of contracting data analytics. The objective will be to identify trends in procurement and analyze procurement activity using data analytics. The scope of this audit will include procurement activity within the Senate and the Senate Administration from 2019 to 2024, and will consider trends in contract spending, sole sourced contracts, amendments and multiple contracts to individual vendors. This engagement will provide a review (limited) level of assurance.

The second audit is on the financial management control framework of the Senate. The objective will be to assess the design and effectiveness of the financial management control framework over the expenditures of senators, senators’ offices, and of the Senate Administration. The scope of the audit will include all expenditures, including expenses of senators, senators’ offices, and the Senate Administration, but excluding those related to personnel (salaries, benefits, etc.) and to parliamentary partners. Procedures will include mapping the expenditure control framework and testing a sample of expenditures to validate the design and effectiveness of the control framework. This engagement will provide a high level of audit assurance.

Your committee’s budget is $313,124 for the fiscal year ending March 31, 2025, which was allocated as part of the Senate’s Main Estimates process. Of that envelope, $120,000 is budgeted for the remuneration of the committee’s two external members, as per the First Report, adopted by the Senate on December 9, 2021. An additional $28,600 is allocated to the contract for the external audit of the Senate’s financial statements. The committee has also authorized the transfer of $50,000 to the Office of the Chief Audit Executive, for the remuneration of a casual employee and $1,277.40 for training purposes. Your committee intends to transfer the remaining $113,246 from the allocated budget for this fiscal year to the Office of the Chief Audit Executive, to undertake the specified audit work.

Your committee has made a strategic decision to expedite the commencement of its audit activities by contracting out the first two audits, under the supervision of the Chief Audit Executive. This approach will ensure that this essential audit work can begin without delay. Concurrently, your committee is seeking the authorization to create two new full-time equivalent (FTE) positions: an audit manager and a senior auditor. Your committee is of the view that these two positions are critical for the implementation and sustainability of the remaining audit plan. By integrating both contracted services and permanent staff, your committee aims to maintain a high standard of audit quality and efficiency, while ensuring oversight and compliance throughout the organization.

Therefore, to facilitate an effective audit and oversight function that can carry-out the three-year risk-based internal audit plan, as approved by your committee, and to ensure that the Senate’s internal audit function is properly staffed, your committee makes the following recommendations:

1. That two new permanent FTE positions (one audit manager and one senior auditor with anticipated classification at MMG01 and SEN10 levels, respectively) be created, above the FTE cap approved by the Standing Committee on Internal Economy, Budgets and Administration (CIBA), in the Office of the Chief Audit Executive, with funding requirements as follows:

(a)for the current fiscal year (2024-25), estimated at $90,000 to be funded from anticipated senators’ office budget surpluses; and

(b)with permanent funding for subsequent years for the two new positions, estimated at $249,152 (to be confirmed as per the results of the classification process), to be requested as part of the 2025-26 Main Estimates process.

2.That performance pay budget for the new FTE at the management level (MMG01) be allocated to the Corporate Account at an estimated amount of $4,670 (succeeded plus rating at 7% for 6 months) for the current fiscal year (2024-25) to be funded from anticipated senators’ office budget surpluses and with permanent funding estimated at $9,340 for subsequent years to be requested as part of the 2025-26 Main Estimates process;

3.That a training budget be allocated to the Office of the Chief Audit Executive for its three employees, with $7,875 to be funded from anticipated senators’ office budget surpluses for 2024-25, and that the permanent funding, for a recurrent total of $10,500, be included as part of the 2025-26 Main Estimates process;

4.That an operation and maintenance (O&M) budget be allocated to the Office of the Chief Audit Executive, with $2,625 to be funded from anticipated senators’ office budget surpluses for 2024-25 and that the permanent funding for a recurring total of $3,500, be included as part of the 2025-26 Main Estimates process;

5.That funds to undertake the two approved internal audits by external resources, following a competitive procurement process and estimated at $360,000, be reallocated to the Office of the Chief Audit Executive from anticipated senators’ office budget surpluses, for a total of $247,000 for the current fiscal year ending March 31, 2025, with the difference funded by transferring funds from the original budget envelope allocated to your committee; and

6.That CIBA be directed to increase the FTE cap to account for the two new positions and to present the required funding as part of the Main Estimates process for the 2025-26 fiscal year.

A summary of the estimated funds required to implement the first year of the risk-based internal audit plan is appended to the report. Based on the experience of executing the first year of the plan, your committee will assess whether additional funding will be required for the second and third years.

Respectfully submitted,

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