Statement of Management Responsibility including Internal Control over Financial Reporting Annex for the Fiscal Year 2018 - 2019

1. Introduction

This document provides summary information on the measures taken by Veterans Affairs Canada to maintain an effective system of internal control over financial reporting, including 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 Departmental Plan and the Departmental Status Report.

2. Departmental system of internal control over financial reporting

2.1 Internal Control Management

Veterans Affairs Canada 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 management framework, approved by the Deputy Head, is in place and comprises:

• organizational accountability structures as they related to internal control management to support sound financial management, including roles and responsibilities of senior departmental managers for control management in their areas of responsibility
• values and ethics
• ongoing communication and training on statutory, and policies and procedures for sound financial management and control
• at least semi-annual monitoring of, and regular updates to, internal control management, as well as the provision of related assessment results and action plans to the Deputy Head and senior departmental management, and as applicable, 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.

2.2.1 Common service arrangements

• Public Services and Procurement Canada, which administers payment of salaries and the procurement of goods and services, and provides accommodation services
• Shared Services Canada, which provides information technology (IT) infrastructure services
• Department of Justice Canada, which provides legal services
• Treasury Board of Canada Secretariat, which provides information on public service insurance and centrally administers payment of the employers share of contributions towards statutory employee benefit plans

2.2.2 Specific Arrangements

• An external service provider administers the Federal Health Claims Processing System on behalf of the Service Delivery Branch. The external service provider has the responsibility to ensure that payments are made in accordance with the conditions set out by the department. As a result, reliance is placed on the control procedures of the external service provider which are subject to a CSAE 3416 audit.
• Another external service provider administers portions of the Vocational Rehabilitation program to help disabled CF Veterans who need support to re-enter civilian life through the provision of medical, psycho/social, and vocational assistance/services.

3. Departmental assessment results for the 2018 to 2019 fiscal year

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

Previous year’s rotational on-going monitoring plan for current year	Status
Entity Level Controls	Completed as planned and no remedial actions required
IT general controls under departmental management	Review complete, report being finalized. Assessment results deferred to 2019-2020
Contract Administration	Completed as planned and no remedial actions required
Operating and Maintenance Payables	Completed as planned remedial actions started
Payroll	Completed as planned and remedial actions started
OSI Clinics	Completed as planned and no remedial actions required
Rehabilitation under departmental management	Completed as planned and no remedial actions required
Treatment benefits under departmental management	Completed as planned and remedial actions started
Veterans Independence Program under departmental management	Completed as planned and no remedial actions required

The key findings and significant adjustments required form the current fiscal year’s assessment activities are summarized in subsection 3.1

3.1 New or significantly amended key controls

In the current fiscal year, there were no significantly amended key controls in existing processes that required a reassessment.

3.2 Ongoing monitoring program

As part of its rotational ongoing monitoring plan, the department completed its reassessment of controls as detailed in the table represented in Section 3. For the most part, the key controls that were tested performed as intended, with remediation required as follows:

Control issues were noted in the Veterans Health Related Travel program. An on-going plan to address the deficiencies is being actioned by the process owner.

Minor control discrepancies were noted in the Operating and Maintenance payable review. These issues will be corrected and monitored going forward.

Related to Payroll, there were control failures noted. These are being addressed with applicable business process owners.

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

Veterans Affairs Canada rotational ongoing monitoring plan over the next three fiscal years, based on an annual validation of the high-risk processes and controls and related adjustments to the ongoing monitoring plan as required, is shown in the following table.

Rotational ongoing monitoring plan

Key control areas	2019/2020 Fiscal Year	2020/2021 Fiscal Year	2021/2022 Fiscal Year
Entity Level Controls			✔
IT general controls under departmental management	✔
Contract Administration			✔
Pension for Life	✔
Disability Pensions		✔
Income Replacement Benefit	✔
Financial Close and Reporting		✔
Long Term Care		✔
Operating and Maintenance Payables			✔
OSI Clinics			✔
Payroll	✔
Treatment Benefits under Departmental Management	✔		✔
Veterans Independence Program		✔

5. Common service providers’ annual assessment results for the 2018 to 2019 fiscal year

Veterans Affairs Canada, as a common service provider of disability pension processing services and third party management services for health care services has completed a risk-based assessment of the internal controls for these services. The results of this assessment are outlined below.

Status of assessment of common services

Key control areas	Design effectiveness testing/ remediation	Operational effectiveness testing/ remediation	Ongoing monitoring rotation
Entity Level Controls	Complete	Complete	2021/2022 fiscal year
IT general controls	Complete	Complete	2019/2020 fiscal year
Disability pensions	Complete	Complete	2020/2021 fiscal year
Treatment Benefits under departmental management	Complete	Complete	2021/2022 fiscal year