Statement of Management Responsibility including Internal Control over Financial Reporting Annex for the Fiscal Year 2023 - 2024

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, 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 Departmental Plans for the 2024 to 2025 fiscal year Departmental Plan 2024–2025 (veterans.gc.ca) and the Departmental Results Report for the 2023 to 2024 fiscal year.

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 overall system of internal control. A departmental internal control management framework, is in place and comprises:

• organizational accountability structures as they relate to internal control management to support sound financial management, including the roles and responsibilities of senior departmental managers for control management in their areas of responsibility;
• values and ethics;
• ongoing communication and training on the legislative and policy requirements for sound financial management and control; and
• monitoring and regular updates on internal control management, as well as 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 is an independent advisory committee to the deputy head. It is responsible to provide 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 departments 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 administers the payment of salaries, the procurement of goods and services, and provides accommodation services;
• Shared Services Canada provides information technology (IT) infrastructure services;
• Department of Justice Canada provides legal services; and
• 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.

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.

Veterans Affairs Canada relies on other external service providers [and/or] departments 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’s program. The external service provider has the authority and responsibility to ensure that payments are made in accordance with the terms and conditions set out by Veterans Affairs Canada’s program. As a result, the control procedures of the external service provider are relied upon.
• Another external service provider, under contract with the Government of Canada, administers portions of the 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. As a result, the control procedures of the external service provider are relied upon.
• Agriculture and Agri-Food Canada provides Veterans Affairs Canada with a financial system platform to capture and report all financial transactions.

A.3. Departmental assessment results for the 2023 to 2024 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

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

A.3.2 Ongoing monitoring program

As part of its rotational ongoing monitoring plan, the department completed its reassessment of entity-level controls and the financial controls within the business processes of:

• Disability Pensions
• Long-term Care
• Payroll
• Treatment Benefits under Departmental Management (Veterans Health Related Controls) and
• Veterans Independence Program

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 is shown in the following table. The ongoing monitoring plan is based on:

• an annual validation of high-risk processes and controls; and
• related adjustments to the ongoing monitoring plan as required.

A.5. Common service providers' annual assessment results for the 2023 to 2024 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 described below.