Audit and Oversight—Twelfth Report of Committee

By: The Hon. Marty Klyne

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Hon. Marty Klyne: Honourable senators, I rise today to move the adoption of the Standing Committee on Audit and Oversight’s twelfth report, which deals with the implementation of the risk-based internal audit plan. As mentioned in the report, the Standing Committee on Audit and Oversight has adopted a three-year risk-based internal audit plan. This represents the latest stage in our journey to implement a robust internal audit function for the Senate.

As you may remember, the Standing Committee on Audit and Oversight was created in October 2020. The committee’s first endeavour was to recruit two highly qualified executive-level candidates, through a fair and transparent process, to sit as external members on the committee, a first in the Senate’s history. Madame Hélène Fortin and Mr. Robert Plamondon were appointed as external members of the committee on June 8, 2021, when the Senate adopted the committee’s fifth report.

The committee then set about establishing its governance structure. This culminated with the adoption, by the Senate, of the Senate Audit and Oversight Charter. The charter sets out the governance, administrative practices and responsibilities of the committee. The charter came into effect on June 23, 2022, along with consequential changes to the Rules and the Senate Administrative Rules, including an independent budget process for the Standing Committee on Audit and Oversight, as detailed in the committee’s sixth report.

The next step for the committee was to recruit a chief audit executive to lead the internal audit function. In October 2023, Mr. Amipal Manchanda was hired with the main task of drafting a multi-year risk-based internal audit charter. As best practices dictate, the plan was drafted following a detailed analysis of key corporate accounts in the Senate as well as a series of consultations with senators and officials from the Senate Administration.

Colleagues, the report before you is the next step in enabling the committee and the chief audit executive to implement the first year of the plan. Ideally, the report should be adopted before the summer adjournment, to enable your committee to make progress during the summer by starting the process of hiring two new resources and launching the competitive procurement process for the two audits planned for this year.

Colleagues, your committee, which for the purposes of integrity, independence, transparency and accountability, is authorized under rule 12-7(4) to act on its own initiative on certain matters, including retaining the services of internal and external auditors and overseeing such audits, and to report at least annually with observations and recommendations to the Senate, now reports as follows:

Your committee will support the next steps in implementing the risk-based internal audit plan with the aim of ensuring that the work of internal audit is positioned to provide evaluation and analysis on the existence, effectiveness and adequacy of risk management, control and governance processes in the Senate.

For the current fiscal year, your committee has approved the execution of two audits, under the responsibility of the Chief Audit Executive. The first audit is a review of contracting data analytics. The objective will be to identify trends in procurement and analyze procurement activity using data analytics. The scope of this audit will include procurement activity within the Senate and the Senate Administration from 2019 to 2024, and will consider trends in contract spending, sole sourced contracts, amendments and multiple contracts to individual vendors. This engagement will provide a review (limited) level of assurance.

The second audit is on the financial management control framework of the Senate. The objective will be to assess the design and effectiveness of the financial management control framework over the expenditures of senators, senators’ offices, and of the Senate Administration. The scope of the audit will include all expenditures, including expenses of senators, senators’ offices, and the Senate Administration, but excluding those related to personnel (salaries, benefits, etc.) and to parliamentary partners. Procedures will include mapping the expenditure control framework and testing a sample of expenditures to validate the design and effectiveness of the control framework. This engagement will provide a high level of audit assurance.

Your committee’s budget is $313,124 for the fiscal year ending March 31, 2025, which was allocated as part of the Senate’s Main Estimates process. Of that envelope, $120,000 is budgeted for the remuneration of the committee’s two external members, as per the First Report, adopted by the Senate on December 9, 2021. An additional $28,600 is allocated to the contract for the external audit of the Senate’s financial statements. The committee has also authorized the transfer of $50,000 to the Office of the Chief Audit Executive, for the remuneration of a casual employee and $1,277.40 for training purposes. Your committee intends to transfer the remaining $113,246 from the allocated budget for this fiscal year to the Office of the Chief Audit Executive, to undertake the specified audit work.

The report continues:

Concurrently, your committee is seeking the authorization to create two new full-time equivalent (FTE) positions: an audit manager and a senior auditor. Your committee is of the view that these two positions are critical for the implementation and sustainability of the remaining audit plan. By integrating both contracted services and permanent staff, your committee aims to maintain a high standard of audit quality and efficiency, while ensuring oversight and compliance throughout the organization.

Therefore, to facilitate an effective audit and oversight function that can carry-out the three-year risk-based internal audit plan, as approved by your committee, and to ensure that the Senate’s internal audit function is properly staffed, your committee makes the following recommendations:

1. That two new permanent FTE positions (one audit manager and one senior auditor with anticipated classification at MMG01 and SEN10 levels, respectively) be created, above the FTE cap approved by the Standing Committee on Internal Economy, Budgets and Administration (CIBA), in the Office of the Chief Audit Executive, with funding requirements as follows:

(a) for the current fiscal year (2024-25), estimated at $90,000 to be funded from anticipated senators’ office budget surpluses . . .

The report continues:

(b) with permanent funding for subsequent years for the two new positions estimated at $249,152 (to be confirmed as per the results of the classification process), to be requested as part of the 2025-26 Main Estimates process.

2. That performance pay budget for the new FTE at the management level (MMG01) be allocated to the Corporate Account at an estimated amount of $4,670 (succeeded plus rating at 7% for 6 months) for the current fiscal year (2024-25) to be funded from anticipated senators’ office budget surpluses and with permanent funding estimated at $9,340 for subsequent years to be requested as part of the 2025-26 Main Estimates process . . .

You will find a summary of the estimated funds required to implement the first year of the risk-based internal audit plan appended to the report. Based on the experience of executing the first year of the plan, your committee will follow up with assessments for the second and third years’ funding.

Colleagues, your Standing Committee on Audit and Oversight and its chief audit executive are ready to go and prepared for launch over the summer, issuing requests for proposals, or RFPs, for the contracting out of the first two audits and recruiting two new permanent financial auditors.

On behalf of your Standing Committee on Audit and Oversight, I respectfully ask you to adopt the report. Let’s get this Boeing going. Thank you.

The Hon. the Speaker: Do you have a question, Senator Deacon? Senator Klyne, will you take a question?

Senator Klyne: I will take a question.

Hon. Colin Deacon: Can you remind the Chamber when the Auditor General made its report recommending that the Senate establish independent oversight of its operations? Was it in 2015?

Senator Klyne: I believe that was a firm recommendation from the Auditor General following the internal audit, I suppose we’ll call it. I see a lot of shudders already.

Yes, we followed that and the Senate approved it. The Standing Committee on Audit and Oversight was established and proceeded with preparing their framework for governance and a work charter, which was also approved in the Senate. It furthered approval of two external members to join the committee, which has been of great value, followed up by providing further reports to the committee, which have all been approved up to this point by the Senate. Now it is asking the Senate to approve this report.

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