Appendix A - Detailed Audit Criteria

The following five (5) criteria were applied during the Examination Phase to assess the adequacy of the MCF for the delivery of pay and benefits services to PCO staff:

  1. The organizational structure (direction, roles and responsibilities, resources and work allocation, and communication) is appropriate and ensures efficient and effective service delivery and financial integrity.

    Key related sub-criteria were used to assess the extent to which:

    • the mandate, authority, and accountability for the delivery of pay and benefits are well defined and communicated within the department;
    • roles and responsibilities are well defined and clearly communicated;
    • goals and objectives for the compensation, benefits, and overtime functions are articulated in HR strategic and operational plans;
    • a corporate risk and mitigation strategy specific to the Compensation (Pay and Benefits) function is in place; and
    • compensation performance expectations (and to some extent staffing and classification performance expectations) to which managers, supervisors and the organization are held accountable are translated into standards, are communicated to PCO management, and performance against those standards is measured.
  2. The integration of PCO departmental processes (HRMS, SMS, and Financial System) with TBS and PWGSC centralized pay and benefits systems and associated procedural and financial controls and requirements for the management of compensation and overtime ensures the efficiency and effectiveness of the compensation administration process.

    Key related sub-criteria were used to assess the extent to which:

    • tests are conducted on financial and HR systems to confirm compliance to TBS policies and performance indicators/standards relating to the handling and recording of pay-related transactions;
    • when applicable, audit recommendations/improvement plans have been developed and are implemented as per Management Action Plans;
    • adequate controls have been established and implemented for financial and HR pay transactions; and
    • pay processes are efficient and effective and comply with the Pay Administration Control Framework established by the Office of the Comptroller General (OCG).
  3. Executive and regular pay services are consistently and efficiently delivered to PCO employees and comply with relevant legislative documents, Treasury Board policies and directives, and collective agreements.

    Key related sub-criteria were used to assess the extent to which the following transactions are authorized, actioned in a timely manner, and comply with relevant Acts and regulations, TBS and departmental policies and directives, and various collective agreements or terms and conditions of employment:

    • Taken-on-Strength (TOS);
    • Struck-off-Strength (SOS);
    • benefits and allowances;
    • pay increments;
    • performance pay;
    • Leave Without Pay (LWOP);
    • acting pay;
    • claims for disability; and
    • paid overtime (overtime compensated through compensatory time-off was not considered since it does not involve any payment but is instead recorded as compensatory leave in the PeopleSoft HR system).
  4. The salary management processes for the authorization and recording of information in PCO's HR and financial management systems are appropriately controlled and comply with PCO financial and HR delegation of signing authorities.

    Key related sub-criteria were used to assess the extent to which:

    • pay transactions are initiated by managers, by an employee, by PCO Finance, or by TBS;
    • peer review and supervisory review are exercised before the submission of transactions for payment;
    • managers verify pay expenses for accuracy in order to comply with their account verification responsibilities under section 34 of the Financial Administration Act (FAA);
    • approvals under section 33 of the FAA provide quality assurance over the adequacy of section 34 FAA verification, and demonstrate appropriate segregation of duties, between pay and financial officers;
    • employee compensation records are complete and accurate;
    • information obtained through electronic systems is complete, accurate, and reliable
  5. Management receives sufficient, complete, timely, and accurate information on pay and benefits expenditures and administrative matters.

    Key related sub-criteria were used to assess the extent to which:

    • a process exists to inform senior management of significant issues, including control weaknesses;
    • financial and non-financial information is provided to senior management, and the information presented is accurate, relevant, timely, and has been subjected to quality assurance processes; and
    • responsibility for reporting is clear, communicated, and applied accordingly.

    Criteria applied to Overtime transactions

    • A detailed record of overtime worked, including dates and to and from hours has been completed
    • The employee has signed and dated the overtime form
    • Reason for overtime is documented and pre-authorized (signed and dated) by manager with adequate delegation of authority - include name and date. (Sect. 32)
    • The transaction can be traced in the supplement Pay report
    • Compensation is based on the correct rate of pay in accordance with the collective agreement
    • The employee was not on leave when overtime was done
    • No evidence that employee decided for overtime
    • There is a clear justification when employee worked in excess of 48 hours in a week

    Criteria applied to all transactions (FAA Sections 32, 33, & 34)

    • Evidence of verification of FAA Section 34 signing authority = Checklist initialed by Compensation Advisor)
    • Evidence of peer review = Checklist initialed by Reviewer
    • Evidence of manager final pay verification under FAA Section 34.2
    • Manager has the authority to sign overtime
    • Sufficient documentation on file.

    Criteria applied to assess efficiency

    • Efficiency (duration from effective date to completion of pay processing)
    • Date - Overtime form is signed by Manager (FAA Section 34.1)
    • Date - Overtime form is received in Compensation
    • Date transaction completed