Risk-Based Audit Plan 2018-2019

April 2018

Table of Contents


The Treasury Board of Canada Policy on Internal Audit seeks to contribute to the improvement of public sector management by ensuring a strong, credible, effective and sustainable internal audit function within departments as well as government-wide. In response to this requirement, Global Affairs Canada has developed this two-year Risk-Based Audit Plan. This plan details the assurance and advisory services that the Office of the Chief Audit Executive (OCAE) will provide, independent of line management, to sustain a strong, credible internal audit regime that contributes directly to sound risk management, control and governance.

The mandate of Global Affairs CanadaFootnote 1 is to manage Canada's diplomatic and consular relations, to encourage the country's international trade and to lead Canada’s international development and humanitarian assistance. Global Affairs Canada was renamed in 2015 from the Department of Foreign Affairs, Trade and Development which brought together the portfolios of Foreign Affairs, Trade and Development under a single organization for greater cohesion in conducting Canada’s external affairs.

The Department administers a broad array of funding programs to protect Canadians and advance Canada’s priorities, interests and leadership abroad, including funding to international organizations. In addition, services are provided to Canadian businesses, Canadians travelling or living abroad, Canadian citizens, and foreign representatives and their dependents in Canada.

In Canada, Global Affairs Canada operates its headquarters in the National Capital Region and has regional offices in eight locations across the country. Global Affairs Canada also manages 178 missions in 110 countriesFootnote 2. These missions house departmental employees who carry out the Global Affairs Canada mandate abroad, as well as 37 partner departments, agencies and co-locators. For 2018-2019, there is $6.49 billion in planned spendingFootnote 3 and as of June 30, 2017 there were 9,990 active Global Affairs Canada Employees, of which 6,238 were Canada Based Staff while 3,752 were Locally Engaged Staff positions at missions abroad.Footnote 4

1.1 Purpose

The Office of the Chief Audit Executive of Global Affairs Canada prepared this document for the Deputy Minister to outline the 2018-19 to 2019-20 Risk-Based Audit Plan (RBAP or the Plan) for the Department. The Plan is designed to support the allocation of audit resources to those areas that represent the most significant risks to the achievement of Global Affairs Canada’s objectives and to respond to the requirements of the Treasury Board Policy on Internal Audit (April 1, 2017). In considering the appropriateness of the Plan, the Deputy Minister is advised by an independent Departmental Audit Committee (DAC) comprised of four external members.

1.2 The Role and Scope of Internal Audit

Internal auditing in the Government of Canada is a professional, independent and objective appraisal function.Footnote 5 As per the Financial Administration Act, the Department is required to have an internal audit capacity, designed to add value to departmental operations by using a disciplined, evidence-based approach to assessing and improving the effectiveness of risk management, control and governance processes.

Internal audit provides oversight over management systems and practices, including emerging risks in an ever-changing environment. In order to ensure internal audit's organizational independence, the Chief Audit Executive reports directly to the Deputy Minister of Foreign Affairs who is the Department’s accounting officer. This enables the provision of independent and objective advice on performance regarding operations, safeguarding of assets, reliability and integrity of reporting and compliance with laws and policies.

The practice of internal audit at Global Affairs Canada, including the development of the RBAP, is in line with the International Professional Practices Framework from the Institute of Internal Auditors (IIA), the suite of internal audit policies from the Treasury Board, and guidance from the Office of the Comptroller General (OCG) within the Treasury Board of Canada Secretariat.

The Institute of Internal AuditorsFootnote 6 endorses the 'Three Lines of Defence in Effective Risk Management and Control' model as a way of explaining the relationship between these functions and as a guide to how responsibilities should be defined:

Exhibit 1 below outlines the three lines of defence in effective risk management and control at Global Affairs Canada. Internal audit is considered to be the third line of defence within the Department and as such plays a key role in the corporate governance structure to provide assurance in the areas of risk management, control and governance processes.

At Global Affairs Canada, the Executive Board provides direction to senior management by setting the organization’s risk appetite. The Executive Board also seeks to identify the principal risks facing the organization. Thereafter, the Executive Board assures itself on an ongoing basis that senior management is responding appropriately to these risks.

Management exercises primary ownership and responsibility for operating risk management and control. As such, management provides leadership and direction to the employees in respect of risk management, and controls the organization’s overall risk-taking activities in relation to the agreed levels of risk.

To ensure the effectiveness of an organization’s risk management framework, the Executive Board needs to be able to rely on adequate line functions – including monitoring and assurance functions – within the organization.

In addition to the provision of oversight services, the OCAE acts as the secretariat for the DAC which is comprised of four independent external members as well as two internal Deputy-level ex-officio members. The DAC provides objective advice and recommendations regarding the sufficiency, quality and results of assurance on the adequacy and functioning of the Department's risk management, control and governance framework and processes (including accountability and auditing systems).

Exhibit 1 – Three Lines of Defence - Global Affairs Canada
The diagram outlines the three lines of defence in effective risk management and control at Global Affairs Canada.
Text version

The diagram outlines the three lines of defence in effective risk management and control at Global Affairs Canada.

The first line of defence consists of Management Controls and Internal Controls over Financial Reporting.

The second line of defence consists of Monitoring Financial Controls (SMO), Recipient Auditing (SGF), Development Evaluation (PRA), Foreign Affairs and Trade Evaluation (PRE), Mission Inspections (ZIV), Risk Management, Planning and Reporting (SRD), Contracting Policy, Monitoring and Operations (SPP), and Special Investigations (ZIU).

The third line of defence consists of Internal Audit (VBD).

While the three lines of defence report to Senior Management, only the third line of defence also reports to the Executive Board/Departmental Audit Committee.

Additionally, residing outside Global Affairs Canada’s structure, there are international oversight bodies (e.g. United Nations Office of Internal Oversight Services, World Bank Internal Audit Vice Presidency). There are also external audits (Office of the Auditor General, Public Service Commission and Office of the Comptroller General) and other external oversight providers (Commissioner of the Environment and Sustainable Development, Commissioner of Official Languages, Privacy Commissioner, Procurement Ombudsman).

Source: Adapted from IIA Position Paper: The Three Lines of Defense in Effective Risk Management and Control, January 2013.

Risk-Based Audit Planning Approach

To meet the requirement of the Treasury Board of Canada Directive on Internal Audit for the establishment of a multi-year plan for internal audit, an assessment of Global Affairs Canada’s areas of risk was conducted by the OCAE’s Risk-Based Audit Plan (RBAP) project team and OCAE management. The RBAP was then updated to ensure that internal audit resources continue to be targeted to the areas of highest risk and significance.

The engagements included in this plan were identified as a result of a comprehensive planning process, which is outlined below.

2.1 Development of the Audit Universe

The Global Affairs Canada audit universe is revised at the outset of the RBAP process in order to ensure a clear relationship with the Departmental Results Framework (DRF) while allowing for maximum flexibility in designing engagements that target areas of risk (see Appendix A – Global Affairs Canada Audit Universe). The audit universe is comprised of auditable elements organized on the basis of the DRF as well as the Department’s internal services. This approach includes elements at the program delivery, service delivery or internal service level, and facilitates the consideration of in-depth vertical or horizontal organization-wide engagements.

The DRF program inventory and the organizational chart were considered in the development of the universe as well as recognized finance, audit and IT frameworks such as COBITFootnote 7 and COSOFootnote 8. Stemming from the Treasury Board of Canada Policy on Results, the audit universe has undergone a significant transformation for 2018-2019 to realign it with the Departmental Results Framework from the previous Program Alignment Architecture (PAA).

2.2 Senior Management Consultations and Documentation Review

The RBAP process included consultations and risk assessment sessions with management (Directors and Directors General) representing key branches and areas of activity in the Department. An additional range of senior management consultations were undertaken in support of the RBAP, with selected Assistant Deputy Ministers, the Programs Committee and the Departmental Audit Committee all of which contributed to the development of the Plan. As a final step, the RBAP was presented to the Executive Board for further validation.

The objective of the consultations was to obtain input and assessment of risk, proposed audit engagements and upcoming changes and challenges in the operating environment. Senior managers were encouraged to share information on their specific areas of responsibility and horizontal risks across the Department, based on their experience and knowledge of operations.

An extensive review of corporate and external documents was also carried out. This included various internal and external plans, operational reports, and information on monitoring, performance, upcoming initiatives and priorities. The objective of this review was to gain knowledge on the internal and external operating environments.

2.3 Risk Assessment and Prioritization

A focused and structured analysis of the audit universe for operational, strategic, security, and financial risks was conducted by the OCAE using the risk assessment scale outlined in Table 1 below. The assessment also considered the risks identified as part of the annual corporate risk planning exercise. It is important to note that estimates of materiality of programs and operations were considered in the assessment of risk.

Table 1 – Risk assessment scale
Risk LevelDescription
VERY HIGHA major event that will require Global Affairs Canada to make large scale, long term realignment to its operations, objectives or finances.
HIGHA critical event that, with proper management, can be endured by Global Affairs Canada.
MEDIUMA significant event that can be managed under normal circumstances by Global Affairs Canada. The consequences could mean that the activity could be subject to significant review or changed ways of operations.
LOWAn event, the consequences of which can be absorbed through normal activity or minimal management effort.

This analysis resulted in the auditable elements being prioritized based on inherent risk and past and future assurance engagements (including internal and external audits) to provide a comprehensive base for selecting the engagements to be included in this plan.

2.4 Consideration of Other Assurance Provider Activities

Further to the OCAE’s role as liaison between the Department and external assurance providers, the OCAE aims to coordinate its risk-based audit planning activities with these entities with a view to: 1) ensuring audit coverage of high risk areas; and 2) minimizing overlap and duplication, thus reducing the audit burden on auditees.

Risk-Based Audit Plan 2018-2019

3.1 Overview

This section presents an overview of the Global Affairs Canada 2018-2019 Risk-Based Audit Plan (see Table 2).

Table 2 – Overview of engagements planned to start in 2018-2019

Continuous Auditing
  1. Foreign Service Directives
  2. Contracting
  3. Vehicle Operations & Maintenance
  4. Property Operations & Maintenance Overtime
  5. Overtime
New Engagements
  1. G7 Summit Management Office
  2. Human Resources Delivery
  3. Branch Management Offices
  4. Occupational Health and Safety
  5. IT Security Threat & Vulnerability Management
  6. Trade Commissioner Services
  7. Continuous Audit Assessment
  8. Common Service Delivery Points
  9. International Humanitarian Assistance
  10. Grants and Contributions Monitoring & Oversight
  11. Climate Change Initiatives

Management Practices at Selected Missions -

  1. Bogota, Colombia
  2. Pretoria, South Africa
  3. Addis Ababa, Ethiopia
  4. Beijing, China
  5. Guatemala City, Guatemala
  6. Singapore (control mission)

3.2 Audit Coverage

This section describes how the RBAP addresses areas of higher risk and significance. There is coverage of all ‘Very High’ and ‘High’ risk auditable entities for which it was determined that audit work is a priority. These entities derive from the audit universe detailed in Appendix A.

In support of the Chief Audit Executive’s annual report to the Deputy Minister and the Departmental Audit Committee, the RBAP also endeavours to address all Core Responsibilities under the Departmental Results Framework). Appendix B - Crosswalk between Departmental Results Framework Core Responsibilities and Planned Audits for 2018-2019 summarizes the extent to which the elements of this framework are covered in the planned audits for 2018-2019.

In addition, the RBAP also sought to ensure coverage of the Global Affairs Canada Ministers’ mandate letters as reflected in their policy and programming priorities. For a crosswalk linking these priorities to relevant planned engagements, please refer to Appendix C – Crosswalk of Ministerial Mandate Letters to Planned Audits.

Appendix A – Global Affairs Canada Audit Universe

Core ResponsibilityProgram Element
1. International Advocacy and Diplomacy1. International Policy Coordination
2. Trade, Investment and International Economic Policy
3. Multilateral Policy
4. International Law
5. Diplomatic Services and Protocol
6. Europe, Middle East and Maghreb Policy & Diplomacy
7. Americas Policy & Diplomacy
8. Asia Pacific Policy & Diplomacy
9. Sub-Saharan Africa Policy & Diplomacy
10. Geographic Coordination and Mission Support
11. Gender Equality and the Empowerment of Women and Girls
12. Humanitarian Action
13. Human Development: Health & Education
14. Growth that Works for Everyone
15. Environment and Climate Action
16. Human Rights, Governance, Democracy & Inclusion
17. Peace and Security Policy
2. Trade and Investment18. Trade Policy, Agreements Negotiations, and Disputes
19. Trade Controls
20. International Business Development
21. International Innovation and Investment
22. Europe, Middle East and Maghreb Trade
23. Americas Trade
24. Asia Pacific Trade
25. Sub-Saharan Africa Trade
3. Development, Peace and Security Programming26. International Assistance Operations
27. Humanitarian Assistance
28. Partnerships and Development Innovation
29. Multilateral International Assistance
30. Peace and Stabilization Operations
31. Anti-Crime and Counter-Terrorism Capacity Building
32. WMD Threat Reduction
33. Canada Fund for Local Initiatives
34. Europe, Middle East and Maghreb International Assistance
35. Americas International Assistance
36. Asia Pacific International Assistance
37. Sub-Saharan Africa International Assistance
38. Grants and Contributions Policy and Operations
4. Help for Canadians Abroad39. Consular Assistance and Administrative Services for Canadians Abroad
40. Emergency Preparedness and Response
5. Support for Canada’s Presence Abroad41. Platform Corporate Services
42. Foreign Service Directives
43. Client Relations and Mission Operations
44. Locally Engaged Staff Services
45. Real Property Planning and Stewardship
46. Real Property Project Delivery, Professional and Technical Services
47. Mission Readiness and Security
48. Mission Network Information Management / Information Technology
6. Internal Services49. Management & Oversight
50. Communications
51. Legal Services
52. Human Resources
52.1 Organizational Design, Human Resources Planning, and Reporting
52.2 Job and Position Management
52.3 Staffing and Employee Integration
52.4 Compensation
52.5 Employee Performance, Learning, Development, and Recognition
52.6 Permanent and Temporary Separation
52.7 Workplace Management
53. Financial Management
53.1 Resource Management
53.2 Reporting
53.3 Corporate accounting
53.4 Transfer payment programs
53.5 Costing
53.6 Internal Controls over Financial Reporting
54. Information Management
55. Information Technology
56. Real Property (Domestic)
57. Materiel Management
58. Acquisition Management
59. Occupational Health and Safety
-60. Security (Other)
60.1 Business Continuity Planning
60.2 Domestic Security
60.3 IT Security (Domestic and Abroad)

Appendix B – Crosswalk between Departmental Results Framework Core Responsibilities and Planned Audits for 2018-2020

Audit Projects 2018-2019International Advocacy and DiplomacyTrade and InvestmentDevelopment, Peace and SecurityHelp for Canadians AbroadSupport for Canada’s Presence AbroadInternal Services
Continuous Auditing
1. Foreign Service Directives-----
2. Contracting-----
3. Vehicle Operations & Maintenance-----
4. Property Operations & Maintenance-----
5. Overtime-----
Planned Projects
6. G7 Summit Management Office----
7. Human Resources - Delivery-----
8. Business Management Offices-----
9. Occupational Health and Safety (Duty of Care)----
10. IT Security Threat & Vulnerability Management----
11. Trade Commissioner Service-----
12. Continuous Audit Assessment-----
13. Common Service Delivery Points-----
14. International Humanitarian Assistance-----
15. Grants and Contributions Monitoring and Oversight----
16. Climate Change Initiatives----
17. Mission Audit 1 – Bogota, Colombia----
18. Mission Audit 2 – Pretoria, South Africa----
19. Mission Audit 3 – Addis Ababa, Ethiopia----
20. Mission Audit 4 – Beijing, China----
21. Mission Audit 5 – Guatemala City, Guatemala----
22. Mission Audit 6 – Singapore (control mission)----

Appendix C – Crosswalk of Ministerial Mandate Letters to Planned Audits

The following table outlines the Risk-Based Audit Plan’s audit coverage against Global Affairs Canada’s Ministers’ mandate lettersFootnote *.

Priority2018-2019 Engagements2019-2020 Engagements
Foreign Affairs
Reduce Impediments to Trade and Commerce (with the United States)-Trade: Dispute Settlement and Litigation
Clean Energy / Environment / Climate ChangeClimate Change Initiatives-
Defence and Foreign Policy / National Security-Peace and Stabilization Operations Program (formerly Global Peace and Security Fund)
Public Diplomacy / Stakeholder Engagement (Canada/abroad)-
  • Diplomacy – Bilateral/Regional/Multilateral
  • Digital Diplomacy / Social Media
International Trade
Implement / Consult on Trade Agreements-Trade: Dispute Settlement and Litigation
Trade and Export Strategy (promotion / investment / implementation)Trade Commissioner Service-
Invest in Clean Technology / EnergyClimate Change Initiatives-
International Development
Development AssistanceInternational Humanitarian Assistance
  • Bilateral Development Assistance
  • Authorized Programming Process
Governance / Human Rights-
  • Development and/or humanitarian programming aspects of Canada’s response to the Middle East crises and violent extremism (Iraq, Syria, Jordan and Lebanon)
  • Peace and Stabilization Operations Program (formerly Global Peace and Security Fund)
Development Innovation
Climate / Development Financing
Climate Change Initiatives-
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