Financial Management Policy
Framework and the Office of the
Comptroller General of Canada
FMI-Vancouver, February 20th, 2008
FMI-Edmonton, February 21st, 2008
FMI-Regina, February 22nd, 2008
Bernie Geiger
TBS/OCG/FMAS
#629462
Policy Renewal: Context
• TB Policy Renewal Initiative - introduced in Jan. 2005 as
one of Secretary's key Management initiatives
• Supports enhanced accountability and excellence in
management of the public service
• Directly linked to Federal Accountability Action Plan
• Commitment to reduce number of policies by at least 50%
2
180
2
24
110
45
22
21
11
43
PRE-RENEWAL POLICY
SUITE
*As of Summer 2005
Policies
Frameworks
Directives
Standards
Guidelines
Guides
Bulletins
Circulars
Other*
458 Instruments
* Includes instruments such
as Procedures and Manuals
Govt.
Operations
Chief
Information
Officer
Office of
the
Comptroller
General
60 Policies
10 Policies
90 Standards
1 Framework
1 Directive
21 Bulletins
Strategic
Comm.
Expenditure,
Operations
and
Reporting
1 Guideline
Labour
Relations
2 Policies
1 Directive
32 Policies
(Excludes NJC
1 Standard
1 Directives
Policies)
53 Policies
1 Procedure
1 Standard
18 Policies
10 Directives
3 Guidelines
15 Guidelines
11 Directives
11 Guidelines
24 Other
9 Standards
8 Other
5 Guidelines
10 Other
Risk
Management
10 Guidelines
21 Guides
3
PSHRMAC
4 Policies
11 Circulars
9 Standards
(Incl. PPM &
RPMP. Also
includes
Governance
policies)
1 Framework
Pensions
1 Guide
1 Policy
Structure of TB Policy Instruments
Instrument
4
Description
Application
Framework
Provides strategic context, explains why
TB sets policy
Architectural
Policy
Formal direction explaining what
Deputies are expected to achieve
Mandatory
Directive
Instructions on how Deputies and officials Mandatory
must act to meet policy
Standard
Detailed technical specifications
Mandatory
Guide / Tool
Variety of documents, databases and
tools used by specialists or employees in
day-to-day duties
Voluntary
(unless referenced
elsewhere)
PROPOSED SET OF TB POLICY
INSTRUMENTS
Application
Instrument Type
*PreRenewal
Proposed
Approved
by SC
Final
Approval
Architect.
Frameworks
Policies
Directives
Standards
Sub-Total
Guidelines
Others
Sub-Total
Total
2
180
24
110
314
45
97
142
458
9
44
95
47
186
47
NA
47
242
6
23
25
4
52
NA
NA
NA
58
5
15
22
4
41
NA
NA
NA
46
Mandatory
This document and its content are in
constant evolution. The information was last
updated on: January 7 2008
9 DIRECTIVES
7 STANDARDS
3 GUIDELINES
12 DIRECTIVES
1 STANDARD
21 GUIDELINES
Voluntary
9 DIRECTIVES
2 STANDARDS
5 GUIDELINES
4 Policies
linked to
Foundation
Framework
12 POLICIES
5 POLICIES
Governance and
Expenditure
Management
Framework
People
Framework
Foundation
7
DIRECTIVES
3
15
POLICIES
GUIDELINES
Compensation
Framework
Official
3 POLICIES 6 DIRECTIVES
Languages
Framework
Values and Ethics
Code for the Public
Service
Financial
Management
Framework
Information
and
Technology
Framework
Framework
4
POLICIES
6 POLICIES
31 DIRECTIVES
12 STANDARDS
1 GUIDELINE
Assets &
Acquired Services
Framework
6 POLICIES
7 DIRECTIVES
6 STANDARDS
2 GUIDELINES
5
* Definitions of policy instruments are not necessarily
consistent in pre-renewal and proposed suites.
Service
Framework
1 POLICY
3 DIRECTIVE
2 STANDARD
11 DIRECTIVES
17 STANDARDS
Policy Renewal: Strengthening
Accountabilities
Renewed policies embody four principles of effective accountability as
defined in the Foundation Framework for Treasury Board Policies
1.
2.
3.
4.
6
Clear roles, responsibilities and performance expectations;
Balancing expectations with capacity to deliver;
Reporting; and
Oversight and consequences.
Political Direction to Change
•
Bill C-2 – Federal Accountability Act
–
–
–
–
7
Creates “Accounting Officer” role for DH
Sets out requirements for Internal Audit
Some changes to Transfer Payments
Strengthens Parliamentary oversight
•
Federal Accountability Action Plan set a timetable for review of
Financial management framework
•
Bill S-201 – quarterly departmental financial statements (was
S-217)
•
Ongoing interest by Public Accounts Committee
Interim
Comptroller General’s
Priorities: 2008
8
Results of CG’s Conversations
• Principles based practices commensurate with risks
• Stronger FM/IA community and systems
• Better use of management resources
• More explainable and defendable practices
• More long term stability
9
Go Forward Strategy: Priorities
10
•
Risk and principle based frameworks
•
Responsible/phased implementation
•
Audited financial statements
•
Tasks of audit committees
•
Financial management policy suite
•
Continue focus on HR/community development
•
Improve systems integration/interfaces
•
Basic FAA compliance and internal controls
•
Stable reforms and corporate memory
•
Communications and stakeholder conversations
Overview of Internal Audit
Policy
11
IA Policy, Objectives and Key Features
• New policy (2006): Not a technical upgrade, but a transformation
• Policy objectives
•
•
•
•
Enhance the role of internal audit
Standardize IA across government, at a high level of quality
Strengthen and further professionalize the function
Increase the independence of internal audit
• Key features
•
•
•
•
•
•
12
Deputy head responsibility
Independent departmental audit committee
Chief audit executive
Broader assurance responsibility for audit – a holistic view
Tailored response for small departments and agencies
Integrated responsibilities between deputy heads and Comptroller General
How Internal Audit Is Organized
•
Decentralized – functional leadership, monitoring, and operations at OCG
•
Large departments and agencies (LDAs)
•
•
•
•
•
•
Small departments and agencies (SDAs)
•
•
•
Office of the Comptroller General-SDA horizontal/sectoral/thematic audits
Deputy head responsibility for additional internal audit, as necessary
Office of the Comptroller General
•
•
13
Deputy head
Chief audit executive
Departmental audit committee
Internal audit charter and risk-based internal audit plan
Reporting
Internal Audit Sector―policy and operations
• Assurance operations―horizontal audit (LDA/SDA), IT audit, forensic audit
• Business intelligence, analysis, liaison
• Professional practices―audit committees, standards and guidance, practice inspection
Capacity Building and Community Development Sector
• Audit committees―recruitment and development
• Audit practitioners―capacity building and community development
Policy on Internal Audit – The Benefits
•
Breaks with the past (i.e., more than 10 years of issues)
•
Deals with issue of centralization (Public Accounts Committee
expectations)
•
Adds a horizontal dimension (interdependencies)
•
Brings a holistic view (context and relevance)
•
Deals with issues of critical mass (for audit capacity in smaller
organizations)
•
Gets back to basics (assurance, rigour, support to accountability,
information for better decision-making)
•
14
Recognizes internal audit not simply a job (a career, a profession)
Support to IA Policy Implementation
•
Maturity model (practical progression; fundamentals in place by 2009)
•
Financial support (increases to departmental reference levels in
2008-10 and thereafter; new OCG/IAS Field Audit Directorate for small
departments)
•
Supply arrangement for professional services (facilitate access to
expert audit services)
•
Human resource strategy (reconfiguration of IA community –
planning, classification, recruitment, development, etc.)
•
Integrated IA business & technology strategy (audit management
software is a priority)
•
Audit standards & practices manual (mandatory elements, practice
guidance; links to IIA Professional Practices Framework)
15
Support to IA Policy Implementation
(cont’d)
•
Practice inspection manual (linked directly to Standards and
Practices; inspect departmental internal audit operations every 4 years)
•
Guidance on core controls (linked to federal government’s
Management Accountability Framework-MAF)
•
Government-wide risk analysis and internal audit plan (in
progress)
•
Forensic audit advice and support (ongoing)
•
Audit committee secretariat (support to recruitment, selection and
development of members – approved by Treasury Board)
•
16
Audit committee guidebook (reference, diagnostic tools)
The Horizon―IA Plans and Priorities
• Independent audit committees
• Reconfiguration of IA community
• Performance management strategy
• Monitoring and business intelligence
• Annual assessments
• Cyclical practice inspections
• Government of Canada audit plan
• Reporting requirements and strategy―holistic assurance
• Review of internal audit policy implementation by end of 2008,
full evaluation by 2011
17
Conclusions on IA
18
•
Focus on transformational solution―enablers, monitoring,
championing
•
Support realistic implementation
•
Promote and preserve a balance in requirements of deputy
heads (accounting officers) and of the Centre
•
Professionalize the internal audit function―reconfigure
•
Ensure independence of internal audit
Draft
Financial Management
Policies
19
Draft Financial Management Policies
20
•
Clarifies and personalizes FM responsibilities
•
Create five new core policies aligned with priorities
•
Improves transparency through new reporting
requirements
•
Specifies consequences
•
Sets stronger base for TB strategic oversight
Draft FM Policy Framework
Four Key Players:
•
Deputy Head (DH) – as Accounting Officer:
– Ensure resources are aligned to objectives
– Ensure that there are effective systems of internal control
– Sign departmental accounts
21
•
ADMs – responsible for FM of areas for which they are
accountable and provide DH assurances to this effect
•
Chief Financial Officers (CFO) – department’s senior FM
executive providing FM leadership, assurances, services and
challenge function
•
Comptroller General (CG) –GoC’s FM leader, setting policy
and monitoring performance
Draft Policy on FM Governance
• Defines financial management capabilities and governance
responsibilities that:
– DHs, CG, CFOs, and ADMs must exercise and be accountable for
management of public resources
• Defines clear governance responsibilities for DH and ADMs for
financial management and reinforces principles of probity and
prudence, and thus supports GoC policy that:
– financial management of all public resources be subject to an effective
accountability and governance regime, and that roles and
responsibilities be clearly communicated.
DM must appoint CFO as part of
Management Team
22
Draft Policy on Internal Control
•
The Policy on Internal Control defines responsibilities of Deputy
Heads for an effective and integrated system of internal control.
•
Aims at ensuring that government-wide system of internal controls
is effective, where it:
– facilitates effectiveness and efficiency of departmental programs and
operations;
– ensures reliability of internal and external financial reporting and
disclosures; and
– supports compliance with laws, regulations and policies.
Sign-off on Statements of internal control
will be big change!
23
Draft Policy on Financial
Resource Management
•
Defines financial management responsibilities of DHs etc. for
strategic planning and budgeting, resource acquisition, allocation,
and utilization, performance management, and departmental
funding of programs and activities through appropriations and
authorities.
•
Reaffirms importance of application of sound financial management
and control as an integral part of strategic and operational
management governance regime of every department.
Sets out relative roles of DH, CFO and
ADMs in resource management
24
Draft Policy on Financial
Information and Reporting
•
Financial and related non-financial information must be fairly
presented in all material respects and managed as a strategic
business resource
•
Strive to obtain unqualified audit opinions on all its financial
statements
•
Requirement for departments to obtain annually an independent
audit opinion of departmental financial statements, unless
exemption has been granted by President of TB
Annual Audited Financial Statements
25
Draft Policy on Financial Systems
•
Defines responsibilities of DHs for implementation and maintenance
of reliable financial systems in compliance with government-wide
standards and protocols.
•
Fosters integration of operational and functional systems and use of
government-wide standards and protocols. Defines role of CG for
approval of changes to departmental financial systems and
interoperability.
CIO and Head of IM/IT must comply with TB
Standards for Financial Systems
26
Draft FM Financial Management Directives
•
•
•
•
•
•
28 Directives will replace some 100 policies, bulletins, circulars,
directives, standards, guides
Clearly and consistently outline the (CFO’s) requirements
While mandatory, there is room for implementation flexibility
In general, they simplify and consolidate existing requirements
Some “new” requirements, usually flowing from new policies
Have been consulted with departments and comments considered
Will be approved and implemented at same time as new FM policies
27
Draft Implementation Plans
28
•
TB Approval 2008 anticipated, further impact analysis/review
underway
•
Further engagement of communities, communications,
guidance, presentations
•
Implementation (tbc) of Policies and FM Directives start in
late 2008
•
Certain key elements (CFO appointment, Audited statements,
Statements of internal control) to be phased in, depends on
characteristics of department: size, readiness, capacity
Conclusion
•
•
•
Changes are coming
Further review, analysis, consultation, planning is
underway
Implementation will be phased, resources will be
available
Questions?
29
30