Statement of Management Responsibility including Internal Control over Financial Reporting Annex for the Fiscal Year 2020 - 2021

A.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.

A.2 Departmental system of internal control over financial reporting

A.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 relate 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.

A.2.2 Service arrangements relevant to financial statements

Veterans Affairs Canada relies on other organizations for processing certain transactions that are recorded in its financial statements, as follows:

A.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

Readers of this annex may refer to the annexes of the above-noted departments for a greater understanding of the systems of internal control over financial reporting related to these specific services.

As well, Veterans Affairs Canada relies on other external service providers for the processing of certain information or transactions that are recorded in its financial statements, as follows:

A.2.2.2 Specific Arrangements

• An external service provider, under contract with the Government of Canada, administers the Federal Health Claims Processing System on behalf of Veterans Affairs Canada. The external service provider has the authority and 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 Canadian Forces Veterans who need support to re-enter civilian life through the provision of medical, psycho/social, and vocational assistance/services. Reliance is placed on the control procedures of the external service provider which are subject to a CSAE 3416 audit.

A.3. Departmental assessment results for the 2020 to 2021 fiscal year

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

A.3.1 New or significantly amended key controls

For the review year, the operational environment was impacted by the Covid 19 pandemic. As the significant disruption to operations was not able to be foreseen, the controls surrounding the acceptance of electronic authorizations for financial transactions had to be amended, to ensure continuity of service. Testing considered these changes to the manner in which financial approvals were provided. Amended processes did not reveal material concern.

A.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 A.3. For the most part, the key controls that were tested performed as intended.

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

Veterans Affairs Canada’s 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.

A.5. Common service providers’ annual assessment results for the 2020 to 2021 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.