Summary of the Assessment of Effectiveness of the Systems of Internal Control over Financial Reporting and the Action Plan of the Canadian Institutes of Health Research for the Fiscal Year 2015‑16 (Unaudited)

Annex to the Statement of Management Responsibility Including Internal Control over Financial Reporting

1. Introduction

This document provides summary information on the measures taken by the Canadian Institutes of Health Research (CIHR) to maintain an effective system of internal control over financial reporting, including information on internal control management, assessment results and related action plans. In particular, it provides summary information on the internal control assessments conducted by CIHR as of March 31, 2016, including progress, results and related action plans, along with some financial highlights pertinent to understanding the control environment of CIHR.

Detailed information on the CIHR authority, mandate and program activities can be found in the 2014‑15 Departmental Performance Report and the 2016‑17 Report on Plans and Priorities.

2. CIHR system of internal control over financial reporting

2.1 Internal control management

CIHR has a well-established governance and accountability structure to support agency assessment efforts and oversight of its system of internal control. An agency internal control management framework, approved by the President, is in place, including:

The Audit Committee provides advice to the President on the adequacy and functioning of CIHR’s risk management, control and governance frameworks and processes.

2.2 Service arrangements relevant to financial statements

Common arrangements

Specific arrangements

3. CIHR assessment results during fiscal year 2015-16

The key findings and significant adjustments required from the current year's assessment activities are summarized below.

New or significantly amended key controls: In the current year, there were no significantly amended key controls in existing processes which required a reassessment and there were no new processes to test for design and operating effectiveness.

Ongoing monitoring plan: As a result of updates to the Management Accountability Framework (MAF) and the Committee of Sponsoring Organizations of the Treadway Commission Methodology (COSO), the ongoing rotational monitoring plan was updated to incorporate entity-level control testing into this year’s assessment to best reflect professional practice.

In 2015-2016, CIHR completed its reassessment of IT general computer controls, entity-level controls, and financial controls, including grants and awards, grants and awards payments, financial statement closing (including payables at year end and accruals), hospitality, travel and travel cards, Canada Research Chairs, and Financial management and budgeting. For the most part, the key controls that were tested performed as intended, with remediation required as follows:

Approvals

Financial management

IT systems

4. CIHR’s action plan

4.1 Progress during fiscal year 2015‑16

CIHR continued to conduct its ongoing monitoring according to the previous fiscal year’s rotational plan, as shown in the following table.

Previous year's rotational ongoing monitoring plan for current year Status
Entity-level controls, grants and awards payments process, and Canada Research Chairs – operating effectiveness testing and remediation of deficiencies Completed as planned; no remedial actions required.
Financial statement closing (including payables at year end and accruals), travel and travel cards, hospitality, Grants and awards, financial management and budgeting, and IT General Controls – operating effectiveness testing and remediation of deficiencies Completed as planned; remedial actions in progress.

4.2 Action plan for the next fiscal year and subsequent years

CIHR has implemented an ongoing rotational monitoring plan over the next three years based on a risk-based annual validation of high risk processes and controls. The plan takes into consideration any substantial changes to key controls in significant processes as well as addresses training to enhance the awareness and knowledge of internal controls over financial reporting and associated responsibilities across CIHR. CIHR’s rotational ongoing monitoring plan over the next three years is shown in the following table.

Key control areas Fiscal year 2016-17 Fiscal year 2017-18 Fiscal year 2018-19
Financial statements closing process (including payables at year end and accruals) Yes Yes Yes
Grants and awards Yes Yes Yes
Grants and awards payment process Yes Yes Yes
Hospitality Yes Yes Yes
IT general controls Yes Yes Yes
Travel and travel cards Yes Yes Yes
Institute Support Grants No Yes No
Procurement No Yes No
Salary and payroll No Yes No
Canada Research Chairs No No Yes
Entity-level controls No No Yes
Financial management and budgeting No No Yes
Collaborative agreements Yes No No
Deferred revenue and revenue Yes No No
Networks of Centres of Excellence Yes No No
Recoveries Yes No No
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