Annex to the Statement of Management Responsibility including Internal Control over Financial Reporting of Justice Canada for Fiscal Year 2020-2021 (Unaudited)

1. Introduction

This document provides summary information on the measures taken by the Department of Justice Canada (the Department) to maintain an effective system of internal control over financial reporting (ICFR), as well as information on internal control management, assessment results and related action plans.

Detailed information on the Department’s authority, mandate and core responsibilities can be found in the 2020-2021 Departmental Plan and the 2020-2021 Departmental Results Report.

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 control financial management framework, approved by the Chief Financial Officer, is in place and includes:

• Organizational accountability structures as they relate to internal control management to support sound financial management, including roles and responsibilities of senior managers in their areas of responsibility for internal control management;
• References to values and ethics, including responsibilities of the Values and Ethics unit, which provides educational and awareness programs and has developed a departmental code of conduct;
• Ongoing communication and training on the legislative and policy requirements for sound financial management and control; and
• Semi-annual monitoring of, and regular updates on, internal control management, as well as provision of related assessment results and action plans to the deputy head and departmental senior management and, as applicable, the Departmental Audit Committee (DAC).

The DAC is an independent and objective committee that provides advice to the Deputy Minister on the adequacy and functioning of the department’s governance, risk management and control frameworks and processes.

2.2 Service arrangements relevant to financial statements

The Department relies on other organizations to process certain transactions that are recorded in its financial statements, as follows:

Common Arrangements within the Government of Canada

• Public Services and Procurement Canada centrally administers the payments of salaries, the procurement of goods and services and provides accommodation services;
• Treasury Board of Canada Secretariat provides information on public service insurance and centrally administers payment of the employer’s share of contributions toward statutory employee benefit plans; and
• Shared Services Canada provides Information Technology (IT) infrastructure services to the Department, including in the areas of data centre, security and network services.

Readers of this Annex may refer to the Annexes of the above-noted organizations for a greater understanding of the systems of ICFR related to these specific services.

Specific Arrangements for the Department

The Department provides certain corporate (internal) services to the Public Prosecution Service of Canada, a human resource management system, a legal case management system (i.e. iCase) and a SAP financial system platform to capture and report all financial transactions.

Common Services provided by the Department

• The Department is the common service provider of legal services to federal departments and agencies, and as such, the Department charges these organizations with the cost of providing legal services pursuant to legal services agreements, and provides an annual dollar figure for those legal services it provides without charge.
• To support the common services provided, the Department is responsible for the appointment of legal agents when in-house expertise is not available. The term legal agents refers to private sector law practitioners who are occasionally retained to provide legal services to federal departments and agencies. The expenses related to legal agents are typically paid by other federal departments and agencies.
• The Department also provides information on pending litigation cases in order to assist federal departments and agencies in the reporting of contingencies.

3. Departmental assessment results for the 2020-2021 fiscal year

The following table summarizes the status of the ongoing monitoring activities according to the previous fiscal year’s rotational plan.

1. The assessment of Costing of Legal Service Rates was performed in support of the Revenues, Receivables and Receipts business process scheduled for review during fiscal year 2020-2021 considering the direct impact it has on Legal Service Revenues.
2. The monitoring of Procurement to pay has been delayed until a future fiscal year considering the impact on priorities in the context of the COVID-19 pandemic.

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

3.1 New or significantly amended controls

In light of the COVID-19 pandemic, the Department proceeded with a broader implementation of electronic signatures for financial approvals. In consequence, the design of approval controls were amended for several financial management business processes. Work was conducted with business process owners to ensure appropriate controls were in place.

3.2 Ongoing monitoring program

In accordance with its rotational ongoing monitoring plan, the Department completed its first formal assessment of the Costing of Legal Service Rates in support of the Revenues, Receivables and Receipts business process scheduled for review during fiscal year 2020-2021. Although cost estimate controls fall within the broader ICFM, it has a direct influence on Legal Service Revenues disclosed in the financial statements. The results are disclosed in section 5, as they relate to common services.

The Department also completed the reassessment of the financial controls within the business processes of:

• Family Law Liability
• Family Law Fees (Revenue); and
• Information Technology General Controls (ITGCs) for the FOAEA System.

For the most part, the key controls that were tested performed as intended and no high risk observations were made. Lower risk remediation plans for the Family Law Liability account are as follows:

Process owners have developed management action plans where applicable, addressing the recommendations above.

There were no notable remediation plans required for the Family Law Fees (Revenue) account or for the ITGCs for the FOAEA system.

As the assessment for the Collection of Overdue Receivables remains to be completed, the areas for improvement and remediation will be disclosed in the 2021-22 Annex to the Statement of Management Responsibility Including Internal Control over Financial Reporting.

4. Departmental action plan for the next fiscal year and subsequent fiscal years

Given that the Department has completed a full assessment of the whole departmental system of ICFR in the past, it is at a state of ongoing monitoring. Building on progress to date, the Department will continue its broader assessment of Internal Controls over Financial Management (ICFM), which commenced during the 2019-2020 fiscal year.

The current three-year plan is shown in the following table. It is based on an annual validation of the high-risk processes and controls and includes related adjustments to the ongoing monitoring plan as required. The plan is comprehensive of ICFM elements to meet the Treasury Board Policy on Financial Management requirements.

1. The assessment of costing of legal service rates was performed in support of the Revenues, Receivables and Receipts business process scheduled for review during fiscal year 2020-2021.
2. The assessment of the Procurement to pay business process has been delayed to a future fiscal year.

With the completion of the current three-year plan, the Department will be conducting a detailed risk assessment in order to establish the next rotational ongoing monitoring plan covering fiscal years 2022-2023 to 2024-2025. In light of the response to the COVID-19 pandemic, it is expected that priorities will continue to evolve throughout the next year. The Department will adapt the plan in consequence.

5. Departmental assessment results for common services during the 2020-2021 fiscal year

The Department of Justice Canada, as a common service provider of legal services, uses a risk-based approach when conducting assessments of the internal controls related to the legal services it provides. It was originally planned that this fiscal year’s assessment would test the operational effectiveness of the legal service revenue business process, as indicated in the 2019-2020 financial statements annex. However, no control testing was conducted on this process in particular given that remediation actions are still in progress.

This fiscal year’s assessment instead focused on the design of the process for the costing of legal service rates charged to other departments considering the direct relation it has with legal service revenues. This assessment also allowed the Department to continue progress on reaching a state of ongoing monitoring of the broader ICFM, as required by the Treasury Board Policy on Financial Management. The results of the assessment did not identify any high risk recommendations but highlighted some opportunities for improvement, although administrative in nature, to document departmental costing procedures as well as key steps performed to complete cost estimates. Process owners have developed management action plans, addressing the recommendations.

During fiscal year 2020-2021, the Internal Audit Branch completed a review of procurement contracting practices for legal agent appointments. The controls related to this process remain under the responsibility of the Department and therefore fall within the scope of key controls monitored as part of common services provided. The results demonstrated that the design of the Department’s legal agent policies, processes, and tools were documented to request, select, and appoint Legal Agents. The Department will leverage the work conducted by the Internal Audit Branch to support the ongoing monitoring of internal controls related to legal agent expenses, which is covered by the procurement to pay business process previously identified in the departmental three-year plan.

1. The exact fiscal year of the review will be determined following the next detailed risk assessment exercise.
2. Work conducted by the Internal Audit Branch through a consulting engagement will be leveraged to support ongoing monitoring of internal controls related to legal agent expenses.

• Previous Page