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 2016–17 (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.

Detailed information on CIHR’s authority, mandate and program activities can be found in the 2015–16 Departmental Performance Report (DPR) and the 2017–18 Departmental Plan.

2. CIHR’s 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

CIHR relies on other organizations for the processing of certain transactions that are recorded in its financial statements as follows.

Common arrangements

Specific arrangements

3. CIHR Assessment Results during Fiscal Year 2016–17

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. Design effectiveness testing was conducted on the key controls for a new payroll subsystem. Significant adjustments were not required for the new key controls.

Ongoing monitoring plan: As part of its rotational ongoing monitoring plan, the Agency completed its reassessment of entity-level controls and the financial controls within the business processes of Grants and awards, Financial statements closing, Payables at year end and accruals, Tri-agency programs (i.e. Canadian Research Chairs, Canada First Research Excellence Fund, Networks of Centres of Excellence), Institute support grants, Hospitality, Travel and travel cards, Procurement and acquisition cards, Payroll and salary benefits, Financial management and budget, Collaborative agreements, Revenue, deferred revenue and receivables, and Self-assessment of IT general controls. For the most part, key controls that were tested operated effectively with minimal improvements required. The following remediation actions were needed:

Financial authority

Financial management

Review

4. Departmental Action Plan

4.1 Progress during Fiscal Year 2016–17

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
Operating effectiveness testing and remediation of deficiencies was undertaken for the following processes:
  • Collaborative agreements
  • Entity-level controls
  • Payroll and salary benefits
  • Procurement and acquisition cards
  • Revenue, deferred revenue and receivables
  • Tri-Agency programs: Networks of Centres of Excellence, Canada Research Chairs
  • Institute support grants
Monitoring was completed as planned and no remedial action was required.
  • Grants and awards including payment
  • Hospitality
  • Information technology general controls.
  • Travel
Monitoring was completed as planned and remedial actions from the previous fiscal year advanced significantly.
  • Payables at year end and accruals
  • Financial management and budgeting
  • Financial statements closing
Monitoring was completed as planned and remedial actions were completed as planned.

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 2017-18 Fiscal year 2018-19 Fiscal year 2019-20
Collaborative agreements No No Yes
Entity-level controls No Yes No
Financial management (budgeting and forecasting) No Yes No
Financial statements closing process (including Payables at year end and accruals) Yes Yes Yes
Grants and awards including payment Yes Yes Yes
Hospitality Yes Yes Yes
Institute support grants Yes No No
IT general controls Yes Yes Yes
Payroll and salary Benefits Yes No No
Procurement and acquisition cards Yes No No
Revenue, deferred revenue and receivables No No Yes
Travel Yes Yes Yes
Tri-Agency programs
Canada First Research Excellence Fund No No No
Canada Research Chairs No Yes No
Networks of Centres of Excellence No No Yes

In addition to the on-going monitoring rotational plan, CIHR has completed or has planned the following assessment work to complement the system of internal control including:

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