2024–25 Audit and Evaluation Committee Annual Report

Sixteenth Annual Report

ISSN  2819-0025

Annual Plan and Annual Report

The Audit and Evaluation Committee (AEC) carries out its activities in accordance with an annual plan that is prepared by the AEC Chair and approved by the Public Sector Integrity Commissioner of Canada (Commissioner). The document specifies the number of meetings planned for the coming year and the topics to be covered at the meetings. At the end of each fiscal year, the AEC Chair, in consultation with other external members, prepares a report (this document) for the Commissioner that describes the AEC’s activities during that year and provides an assessment of the systems, controls and other management tools that are in place at the Office of the Public Sector Integrity Commissioner of Canada (PSIC).

Membership

The AEC Chair and members are selected by the Commissioner. The membership of the AEC in 2024–25 was as follows:

Chair

• Jacques Paquette, external

Members

• Harriet Solloway, Commissioner
• Danièle Besner, external

Regular non-member attendees

• Nicolas Palanque, Deputy Commissioner and Chief Audit Executive (CAE) (until November 2024)
• Brian Radford, Deputy Commissioner and CAE (since December 2024)
• Ludovic Noubissi, Chief Financial Officer (CFO)
• Heidi Bartman, Chief Results Delivery Officer
• Christian Santarossa, Director of Operations

Meetings

The AEC met on the following dates in 2024–25:

• May 14, 2024
• September 5, 2024
• December 2, 2024
• February 24, 2025

All meetings were held in person. At each meeting, the external members held a closed session with the Commissioner. A closed session was also held with representatives of the Office of the Auditor General (OAG).

Committee Support

The AEC has received information and support from PSIC’s management to enable it to carry out its duties and responsibilities effectively. The Commissioner has also made available to the AEC PSIC’s reports to Parliament, including the annual report and case reports of findings.

The Chief Results Delivery Officer prepared the agendas in consultation with the AEC Chair, as well as the minutes for meetings held in 2024–25, and supported the work of the AEC.

Summary of Topics Discussed at Meetings in 2024–25

Here are the points addressed by the AEC in 2024–25:

Audit of Financial Statements

• The OAG audits PSIC’s annual financial statements.
• On September 5, 2024, Riowen Abgrall, Louiselle Otis and Sarah Bergeron of the OAG presented the AEC with the results of their audit of the 2023–24 financial statements. No significant errors were found, and the audit found no proof of fraud.
• Accordingly, following its review, the OAG did not issue a management letter to PSIC.
• Ms. Otis thanked PSIC’s staff for their full cooperation.
• Representatives of the OAG asked AEC members and non-member attendees if they were aware of any fraud situations at PSIC. Members and non-member attendees replied that they were not aware of any such situation.
• AEC members expressed their satisfaction with the report.
• The OAG emphasized that thanks to efficiency efforts, audit costs have decreased while the quality of the work was maintained.
• A closed session was held between external AEC members and representatives of the OAG.
• The audit cycle continued on February 24, 2025, with a presentation by the OAG on the audit plan for the 2024–25 financial statements.
• The OAG reported some recent developments in standards from the Public Sector Accounting Board, including a new conceptual framework. However, it indicated that these changes do not have a significant impact on PSIC.
• The engagement letter signed last year by the Commissioner remains in effect.

PSIC Risk-based Audit and Evaluation Plan (RBAEP)

• The AEC discussed the PSIC RBAEP at each meeting.
• In light of the growing cybersecurity risk, this issue has received particular attention. At the AEC’s request, PSIC’s Chief Information Officer reviewed the cybersecurity risk section of the RBAEP and proposed modifications and adjustments. The AEC was pleased with the quality of the work and believes that the RBAEP, including risk mitigation strategies, provides greater assurance to PSIC.

AEC 2023–24 Annual Report

• The annual report has been approved and published on the PSIC website.

AEC 2024–25 Annual Plan

• The AEC discussed the annual plan and planned the agendas for future meetings accordingly, to ensure that all elements of the plan were covered. Certain elements of the plan have also been clarified to specify expectations and deadlines.

AEC Mandate

• The AEC regularly reviews its terms of reference to ensure that they are both complete and relevant. No changes have been made to the version updated in May 2023.

Audit and Evaluation Dashboard

• The dashboard was discussed at each meeting. Discussions focused on the progress of each audit and evaluation, as well as on proposed changes to the schedule when necessary.
• It was determined that the next cybersecurity audit will be conducted in 2026–27.
• Discussions also addressed the implementation of activities identified in the AEC 2024–25 Annual Plan and the timelines for certain audits, including the accessibility audit and the evaluation of the Work Place Harassment and Violence Prevention Policy.
• The results of the follow-up to the cyclical evaluation of human resources were discussed, including its recommendations.
• The results of the audit of internal controls related to financial reporting were discussed. No significant issues were identified, but some recommendations were made.

Business Continuity Plan

• The AEC was informed of the latest update to the plan.

Legal Update

• The General Counsel provided an update on various significant litigation.

Organizational Values and Ethics

• Ms. Bartman informed the AEC that there are new requirements regarding values and ethics. Employees must complete training on values specific to PSIC. An interactive session on values and ethics for PSIC’s staff is scheduled for May 2025.

Office of the Comptroller General

• The Risk-Based Internal Audit Plan for 2024–25 and 2025–26 from the Office of the Comptroller General was presented to the AEC for information. PSIC is not included in this plan, as it has its own audit committee and Plan. However, this plan serves as a useful reference for the AEC.

Budget

• The AEC examined the quarterly financial reports prepared by PSIC and forwarded its observations to the CFO. At each meeting, AEC members received a full report and analysis on expenditures and forecasts from the CFO.

Human Resources

• The AEC was informed of various human resources matters, including staffing, employee turnover, training and planning. The AEC was also kept informed of PSIC’s workload.

PSIC Reports

• The AEC provided advice, where necessary, on PSIC’s Annual Reports, Departmental Plans and Departmental Results Reports. The AEC suggested using these reports to better explain to the public what the statistics reveal in order to highlight the issues faced by PSIC and better showcase its results.

Changes Affecting Audit and Evaluation Staff

• One change took place in 2024–25, as Mr. Brian Radford became the new CAE.

Self-Assessment

• Every two years, the AEC conducts a self-assessment through a comprehensive questionnaire completed anonymously. The survey was conducted over the summer, and the results were discussed at the meeting on September 5, 2024.
• Overall, the results of the AEC’s self-assessment were very positive. It was noted that one question should be reviewed, as it appeared to cause some confusion. The next self-assessment will be conducted in 2026.

Orientation and Learning Activities

Treasury Board Secretariat Symposium for Departmental Audit Committees (DACs)

• On November 27, 2024, Jacques Paquette and Daniele Besner attended the symposium. The symposium was virtual and took place over one half-day. The symposium covered a number of themes, including the implementation of the expenditure reduction exercise, cybersecurity risks, and the various roles of departmental audit committees.

Agenda for Upcoming AEC Meetings

A number of AEC activities take place every year, including the following:

• Provide advice and recommendations to the Commissioner on service delivery issues, including performance measurement and communication with stakeholders;
• Assess risks and appropriate follow-up, including mitigation strategies;
• Review audit and evaluation reports;
• Follow up on management action plans, including recommendations made in reports from other parliamentary officers;
• Collaborate with the OAG and the Office of the Comptroller General, if necessary, given PSIC’s status as an agent of Parliament;
• As an audit committee, deepen our understanding of our administration and activities through briefings by knowledgeable staff on our operations so that committee members are better able to advise on risks;
• Review quarterly financial reports and provide comments, as appropriate, on PSIC’s Annual Reports, Departmental Plans and Departmental Results Reports;
• Participate, as needed, in learning activities offered to all auditors to exchange with audit committee members from other departments and agencies.

Evaluation of PSIC’S Internal Controls, Risk Management and Governance Mechanisms

The AEC meets as a committee with PSIC’s staff three to five times a year. As a result, it can be difficult for the AEC to properly fulfill its role of providing conclusive advice to the Commissioner on the functioning of internal control, risk management and governance mechanisms.

In order to fulfill its role, the following steps have been taken to increase the reliability of the advice the AEC provides to the Commissioner during the reporting period and in this report:

• At each meeting, external AEC members hold a closed session with the Commissioner.
• During the reporting period, the AEC Chair maintained regular contact with the CAE and CFO.
• External AEC members reviewed PSIC’s quarterly financial statements and, at each meeting, questions of a financial nature were put to the CFO.
• Assessments of the various internal financial controls to be carried out by an external firm have been incorporated into the audit and evaluation plan to complement the other audit mechanisms already in place.
• External AEC members held a closed meeting on September 5, 2024, with representatives of the OAG responsible for auditing PSIC’s 2023–24 financial statements. The audit did not identify any material misstatements or concerns that should be brought to the attention of the AEC, CFO, CAE or Commissioner.

Following the implementation of these measures, the view of the external AEC members is that PSIC’s system of internal controls, risk management and governance processes are sound.

Assessment of the Capacity and Performance of the Internal Audit and Evaluation Functions

The AEC noted the following:

• The AEC meets regularly and has an external Chair. Its membership is reviewed annually and renewed when required.
• There is an audit by the OAG every year, and the OAG’s staff have expressed appreciation for the cooperation of PSIC’s representatives with whom they worked in carrying out the audits, as well as for the cooperation of representatives of the Canadian Human Rights Commission, PSIC’s financial service providers.
• An RBAEP was developed and reviewed by the AEC and approved by the Commissioner. It is revised, as necessary. The Audit and Evaluation Dashboard is prepared by the CAE and is reviewed at least once every fiscal year by the AEC.
• PSIC brings in external consultants who provide professional services in the areas of risk assessment, audit and evaluation, and audit and evaluation planning. The AEC will continue to monitor the results of these services.
• Sufficient funds are available to carry out the approved RBAEP.

The AEC will continue to review the capacity and performance of PSIC’s internal audit and evaluation functions.

(Original signed by)

Jacques Paquette, Chair
On behalf of the PSIC Audit and Evaluation Committee

Appendix A

Audit Committees

The requirement for public sector organizations to establish independent audit committees in which a majority of members are from outside the federal public administration is an essential component of the Treasury Board (TB) Policy on Internal Audit. The fundamental role of such committees is to ensure that the deputy head has independent, objective advice and assurance on the adequacy of the department’s control and accountability processes.

The importance of audit committees was further highlighted in legislation when the Federal Accountability Act amended the Financial Administration Act to include the following requirements:

Internal Audit and Accounting Officers (under the Financial Administration Act)

Audit capacity

16.1 The deputy head or chief executive officer of a department is responsible for ensuring an internal audit capacity appropriate to the needs of the department.

2006, c. 9, s. 259.

Audit committees

16.2 Subject to and except as otherwise provided in any directives issued by the Treasury Board under paragraph 7(1)(e.2), the deputy head or chief executive officer of a department shall establish an audit committee for the department.

2006, c. 9, s. 259.

Appointment

16.21 (1) A person who does not occupy a position in the federal public administration but who meets the qualifications established by directive of the Treasury Board may be appointed to an audit committee by the Treasury Board on the recommendation of the President of the Treasury Board.

Audit Committees and Parliamentary Agencies

The TB Policy on Internal Audit makes specific reference to offices of agents of Parliament, including the Office of the Public Sector Integrity Commissioner of Canada (PSIC). Deputy heads of these organizations may, subject to compliance with sections 16.1 and 16.2 of the Financial Administration Act, authorize such departures from the specific policy requirements contained in the Policy, as they may deem appropriate in light of the governance arrangements, statutory mandate and risk profile of the organization of which they are deputy heads.

Audit and Evaluation

Although audit and evaluation are the subjects of separate policies in the federal government, the management of these functions is closely linked, particularly in small agencies. In the interest of efficiency, PSIC’s audit committee is also responsible for evaluation, in accordance with the TB Policy on Results, and is consequently named the Audit and Evaluation Committee (AEC).

Accountability of the AEC

The AEC’s role is advisory in nature. The AEC’s sole accountability is to the Public Sector Integrity Commissioner of Canada (Commissioner). In this regard, members are accountable for the objectivity, quality and timeliness of their advice and for the fulfillment of their contractual responsibilities. In addition, the AEC conducts an annual self-assessment of its work.

Responsibilities of the AEC

The AEC’s responsibilities under the TB Policy on Internal Audit (April 1, 2017) are as follows:

• Provide objective advice and recommendations to the Commissioner regarding the sufficiency, quality and results of internal audit engagements related to the adequacy and functioning of PSIC’s frameworks and processes for risk management, control and governance;
• Using a risk-based approach, review all areas of responsibility for departmental audit committees related to departmental management, control and accountability processes as determined by the Comptroller General of Canada. These include the following:
  • Values and ethics;
  • Risk management;
  • Internal audit function;
  • Internal assurance providers;
  • Follow-up on management action plans;
  • Financial statements and public accounts reporting;
  • Accountability reports;
• Provide advice and recommendations on matters for which the Commissioner, as accounting officer, is responsible and on other related matters as needed or requested by the Commissioner.

With respect to evaluations, the AEC will do the following:

• Provide advice to the Commissioner, through a review of the PSIC RBAEP, regarding PSIC’s programs or operations that should be evaluated;
• Review and advise on the terms of reference, scope and timing of any planned evaluation;
• Review the findings of evaluations and monitor subsequent management action plans.