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 2017–18 (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 2016–17 Departmental Results Report (DRR) and the 2018–19 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 2017–18

The key findings and 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. Operating effectiveness testing was conducted on the key controls for a new system relating to the payroll and benefits process. Significant adjustments were not required; however, some minor changes are recommended for the improvement of the control environment and recommended as part of Treasury Board’s Guidelines on the Financial Management of Pay Administration.

Ongoing monitoring plan: As part of its rotational ongoing monitoring plan, the Agency completed its reassessment of the financial controls within the business processes of Grants and awards, Financial statements preparation including the Payables at year end and accruals processes, Tri-agency programs; namely the Canadian Research Chairs program, the Institute support grant program, Hospitality, Travel and travel cards, Procurement and acquisition cards, and Self-assessment of IT general controls. For the most part, key controls that were tested operated effectively with minimal improvements required. 

Remediation Actions

The following remediation actions were noted related to financial authorities during the assessment including:

4. Departmental Action Plan

4.1 Progress during Fiscal Year 2017–18

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
  • Information technology general controls
  • Procurement and acquisition cards
  • Revenue, deferred revenue and receivables
  • Tri-Agency programs
  • Institute support grants
  • Payables at year end and accruals
  • Financial management and budgeting
  • Financial statements closing
Monitoring was completed as planned and no remedial action was required.
  • Grants and awards including payment
  • Hospitality
  • Payroll and salary benefits
  • Travel
Implementation of remedial actions from the previous fiscal year has significantly improved controls for these processes.

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
Fiscal Year
Fiscal Year
Collaborative agreements No Yes No
Entity-level controls Yes No No
Financial management (budgeting and forecasting) Yes No 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 No No Yes
IT general controls Yes Yes Yes
Payroll and salary benefitsFootnote 1 Yes Yes Yes
Procurement and acquisition cards No No Yes
Revenue, deferred revenue and receivables No Yes No
Travel Yes Yes Yes
Tri-Agency programsFootnote 2 Yes No No

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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