Introduction

The auditors would like to thank WD staff for their cooperation and timely assistance provided to the audit team throughout this engagement.

Background

Under the Federal Accountability Act, the Deputy Minister is designated as the accounting officer for the department and signs off on the departmental accounts. The deputy is supported by the Chief Financial Officer and Assistant Deputy Ministers to fulfill these responsibilities that specifically include:

• organizing resources to deliver departmental programs in compliance with government policies and procedures; and
• establishing and maintaining effective systems of internal controls to ensure that the departmental resources are used effectively and efficiently.

Comprehensive and effective financial management control frameworks are critical in providing stewardship over public funds while achieving departmental strategic objectives. Strong financial management and related internal controls are critical components of the Stewardship section of the Government of Canada Management Accountability Framework. As a result, the Deputy Minister approved this audit in the 2007-08 Risk-Based Audit Plan and it was carried over as a top priority in the approved 2008-11 Risk Based Audit Plan.

Audit Objectives

The specific objectives of this audit were to assess:

• the adequacy of the departmental financial management control framework to ensure compliance with the Treasury Board financial management policies;
• the effectiveness of the delegation of financial authorities;
• segregation of duties for key financial processes;
• the appropriateness of controls maintained over expenditures to ensure compliance to sections 32, 33, and 34 of the Financial Administration Act; and
• the responsiveness and effectiveness of financial risk management.

Key Risks

The audit focussed on the following key risks to the financial management function:

• inadequate or poorly documented financial management control framework;
• departmental policies that are inconsistent with Treasury Board policies;
• approvals from individuals without delegated authority;
• delegated managers with insufficient awareness or training;
• unauthorized expenditure approvals; and
• lack of formal risk management processes.

Audit Scope

This audit covered expenditures incurred during January 1, 2007 to June 30, 2008. The audit criteria for this audit was developed using TBS controls framework and other best practices. The audit was department-wide in scope and assessed the departmental financial management control framework, departmental policies and procedures, and financial roles and responsibilities. In addition, the auditors tested a random and representative sample from grants and contributions transactions and operating expenditure transactions from May 2007 and February 2008. The auditors tested this sample to ensure data integrity and compliance with Treasury Board and departmental policies and directives.