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 2018–19 (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 2017–18 Departmental Results Report (DRR) and the 2019–20 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. The agency internal control management framework, approved by the President, includes:

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 2018–19

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

New or significantly amended key controls: In recent years, additional controls have been added to the payroll and benefits business process. Most key controls that were tested operated as designed. However, some improvements were required. The identified improvements were accepted by management and an appropriate management response was developed.

Ongoing monitoring program: As part of its rotational ongoing monitoring plan, CIHR completed its reassessment of the following business processes including:

Most key controls that were tested operated as designed. However, some improvements were required. The identified improvements were accepted by management and an appropriate management response was developed.

4. Departmental Action Plan

4.1 Progress During Fiscal Year 2018-19

CIHR continued to conduct its on-going monitoring according to the previous year’s rotational plans as follows:

Progress During the Fiscal Year 2018-19
Previous year's rotational ongoing monitoring plan for current year Status
Entity-level controls Controls are operating as designed. No remedial actions are required at this time.
Information technology general controls
Hospitality
Financial statements preparation (including Payables at year end and accruals)
Financial management and budgeting
Grants and awards, including payment Controls processes require minor improvements to their design or operational effectiveness. Management has accepted recommendations and has begun remedial actions.
Payroll and benefits
Travel

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 each process. CIHR’s rotational ongoing monitoring plan over the next three years is shown in the following table.

Rotational Ongoing Monitoring Plan
Key Control Areas 2019–20 2020-21 2021–22
Entity-level controls
IT general controls
Key Business Processes
Grants and awards including payment
Payroll and benefits
Travel
Hospitality
Revenue, deferred revenue and receivables
Collaborative agreements
Institute support grants
Procurement and acquisition cards
Financial management (budgeting and forecasting)
Tri-Agency programsFootnote 1

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:

Date modified: