Western Economic Diversification Canada
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Introduction

Sound year-end procedures are key to ensuring that financial information provided to management is reliable and timely. This in turn helps management make right decisions regarding the use of appropriations and budgetary allocations, and meet its financial reporting responsibilities.

Around year-end, large volumes of transactions are processed and many decisions made over a relatively compressed timeline by staff at headquarters and in the regions, making coordination and communication tasks more challenging. As at March 31, 2011, the department had recorded accounts payable and accrued liabilities to external parties of $217.7 million, of which $214.4 related to grants and contributions and $3.3 million to operating expenses.

Corporate Finance is responsible for establishing overall year-end guidelines and timetable to meet year-end requirements of central agencies. Regional staff are responsible for applying those guidelines in their respective regions.

The focus of the audit was on the procedures and control activities that were in place at or around 2010-11 fiscal year-end. The audit also examined the settlement and clearance of Payables at Year-End (PAYEs) outstanding for the past two year-ends (2011 and 2010).

Audit Objective

The objective of this engagement was to determine how well the department has designed and implemented controls relating to year-end procedures, particularly as they related to:

  • commitments and budgetary management;
  • payables and accruals; and
  • departmental and public accounts reporting.

Key Risks

Management designs controls to manage risks. The audit examined the processes and controls that management has designed to mitigate the following key risks:

  • transactions at year-end cause departmental spending to exceed appropriations;
     
  • appropriations lapse despite a need to fund projects;
     
  • errors are made in financial information due to incorrect application of policies, miscommunication, large volume of transactions and complexity of reporting requirements;
     
  • payables and accruals are not properly supported by documentation; and
     
  • central agency requirements are not complied with.

Audit Scope

The audit examined the policies, procedures and control activities that were operational at the end of the most recent fiscal year (2010-11). The audit also examined the settlement and clearance of Payables at Year-End (PAYEs) outstanding as at the past two year-ends (2011 and 2010).

Acknowledgements

The audit team would like to thank management and staff at headquarters and the regions for their cooperation and assistance throughout the engagement.