Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697721644557.pdf (Canada)
LIBRARY OF PARLIAMENT TABLE OF CONTENTS Statement of Management Responsibility Including Internal Control Over Financial Reporting Independent Auditors' Report to the Parliamentary Librarian Statement of Financial Position Statement of Operations and the Library's Net financial Position Statement of Change in the Library's Net Debt Statement of Cash Flows Notes to the Financial Statements Annex to the Statement of Management Responsibility Including Internal Control Over Financial Reporting Annex to the Statement of Management Responsibility Including Internal Control Over Financial Reporting Summary of the assessment of effectiveness of the systems of internal control over financial reporting and action plan of the Library of Parliament for fiscal year 2011-2012 21 Preface With the adoption by the Library of Parliament (the “Library”) of the Policy on Internal Control, effective November 9, 2010, the Library is required to demonstrate the measures it is taking to maintain an effective system of internal control over financial reporting (ICFR).
As part of this policy the Library is expected to conduct an annual assessment of its system of ICFR, establish an action plan to address any necessary adjustments, and to attach to the Statement of Management Responsibility a summary of the assessment results and action plan.
An effective system of ICFR aims to achieve reliable financial statements and to provide assurances that: • Transactions are appropriately authorized; • Financial records are properly maintained; • Assets are safeguarded from risks such as waste, abuse, loss, fraud and mismanagement; • Applicable laws, regulations and policies are followed.
It is important to note that the system of ICFR is not designed to eliminate all risks, rather to mitigate risk to a reasonable level with controls that are balanced with and proportionate to the risks they aim to mitigate.

The maintenance of an effective system of ICFR is an ongoing process designed to identify, assess effectiveness and adjust as required key risks and associated key controls, as well as to monitor its performance in support of continuous improvement.
The system of ICFR is designed to mitigate risks to a reasonable level based on an on-going process to identify key risks, to assess effectiveness of associated key controls, and to make any necessary adjustments.

22 1.

Introduction This document is attached to the Library Statement of Management Responsibility Including Internal Control Over Financial Reporting for the 2011-2012 fiscal-year.
As required by the Library Policy on Internal Control, this document provides summary information on the measures taken by the Library to maintain an effective system of internal control over financial reporting (ICFR).

In particular, it provides summary information on the assessments conducted by the Library as at March 31, 2012, including progress, results and related action plans along with some financial highlights pertinent to understanding the control environment unique to the Library.
This is the second year of publication of this annex.

1.1 Authority, Mandate and Program Activities Detailed information on the Library’s authority, mandate and program activities can be found in the Library Strategic Outlook.

Financial highlights Below is key financial information for fiscal year 2011-2012.

More information can be found in the Library’s audited Financial Statements and Notes to the Financial Statements.

• Total expenses were $52.5M, 70% of which is salary.
• Total revenues were $858.5K, most of which are from Boutique sales.

• Total assets and liabilities were $5.0M and $9.8M respectively.

Tangible capital assets comprise 54% of departmental total assets.

Accounts payable and accrued liabilities comprise 21% of total liabilities.

• The Library has a number of information systems that are critical to its operations and financial reporting.

1.2 Audited financial statements Financial statements of the Library have been audited since 2007.
The Library has always received a clean audit opinion, including for fiscal-year 2011-2012.

1.3 Service arrangements relevant to financial statements The Library relies on other organizations for the processing of certain transactions that are recorded in its financial statements.

• PWGSC centrally administers the payments of salaries and the management of accommodation services.
• Treasury Board Secretariat provides the Library with information used to calculate various accruals and allowances, such as the accrued severance liability.

• Under a Memorandum of Understanding, the House of Commons provides system development and maintenance support services for the information systems used in financial reporting.
1.4 Accounting changes in fiscal-year 2011-2012 During 2011, amendments were made to Treasury Board Accounting Standard 1.2––Departmental and Agency Financial Statements to improve financial reporting by government departments and agencies.

The amendments are effective for financial reporting of fiscal years ending March 31, 2012, and later.

The changes to the Library’s financial statements, described below, have been applied retroactively.
Net debt (calculated as liabilities less financial assets) is now presented in the Statement of Financial Position.

Accompanying this change, the Library now presents a Statement of Change in Net Debt and no longer presents a Statement of Equity.

23 1.5 Changes in Senior Management The Parliamentary Librarian, Mr. William R. Young retired in December 2011.

Ms. Sonia L’Heureux, Assistant Parliamentary Librarian assumed the leadership of the Library until year end.
Ms Lynn Potter was appointed to the position of Chief Financial Officer in April 2011.

2.

Library's control environment relevant to ICFR The Library recognizes the importance of setting the tone from the top to help ensure that staff at all levels understand their roles in maintaining effective systems of ICFR and is well equipped to exercise these responsibilities effectively.
The Library’s focus is to ensure risks are managed well through a responsive and risk-based control environment that enables continuous improvement and innovation.

Key components of entity level controls at the Library aim at ensuring solid governance and effective risk management at the corporate level, as well as the maintenance of other entity level controls to provide effective support to staff by raising awareness and providing appropriate knowledge, skills and tools.
2.1 Key positions, roles and responsibilities Below are the Library’s key positions and committees with responsibilities for maintaining and reviewing the effectiveness of its system of ICFR.

Parliamentary Librarian (PL) – The Library’s PL, as Accounting Officer, assumes overall responsibility and leadership for the measures taken to maintain an effective system of internal control.

In this role, the PL chairs the Library Executive Committee.
Chief Financial Officer (CFO) – The Library’s CFO reports directly to the PL and provides leadership for the coordination, coherence and focus on the design and maintenance of an effective and integrated system of ICFR, including its annual assessment.

Service Heads – The Library’s Service Heads in charge of program delivery are responsible for maintaining and reviewing the effectiveness of the system of ICFR falling within their mandate.
Library Executive Committee (LEC) - As the Library’s central decision-making body, the LEC reviews, approves and monitors the Corporate Risks Profile and the Library system of internal control, including the assessment and action plans relating to the system of ICFR.

2.2 Key measures taken by the Library The Library's control environment includes a series of measures to equip its staff to manage risks well through raising awareness, providing appropriate knowledge and tools as well as developing skills.
Key measures include: • The establishment of a values and ethics code; • Job descriptions for the Senior Officer, Financial Services and the Chief, Financial Services have been updated to include ICFR responsibilities; • Annual performance agreements with clearly set out financial management responsibilities for all executives; • Training program and communications in core areas of financial management; • Policies tailored to the Library’s control environment; • Regularly updated delegation of financial signing authorities instrument; • Documentation of main business processes and related key risk and control points to support the management and oversight of its system of ICFR.
24 3.

Assessment of the Library's system of ICFR 3.1 Assessment baseline The Library’s financial statements for 2011-2012 were audited by Ernst & Young.

The financial statements for the previous 5 years were audited by KPMG.

In parallel, senior management has been providing increased focus on formalizing its approach to the management and on-going maintenance of its systems of ICFR with the objective of supporting continuous improvement.
In 2010-2011, consistent with the Library Policy on Internal Control, the Library also implemented a more systematic risk-based and multi-year assessment plan of the design and operating effectiveness of its systems of ICFR.
Whether it is to support the control-based audit requirements or those of the Policy on Internal Control, an effective system of ICFR has the objective to provide reasonable assurance that: • Transactions are appropriately authorized; • Data and financial information are accurate and consistent; • Financial records are properly maintained; • Assets are safeguarded; and • Applicable laws, regulations and policies are followed.
Over time, this includes assessment of design and operating effectiveness of the system of ICFR leading to ensuring the on-going monitoring and continuous improvement of the Library system of ICFR.

Design effectiveness means to ensure that key control points are identified, documented, in place and that they are aligned with the risks (i.e.

controls are balanced with and proportionate to the risks they aim to mitigate) and that any remediation is addressed.
This includes the mapping of key processes and IT systems to the main accounts by location as applicable.

Operating effectiveness means that the application of key controls has been tested over a defined period and that any required remediation is addressed.

The assessment covers all Library control levels which include corporate or entity, general computer and business process controls.
On-going monitoring means that a systematic integrated approach to monitoring is in place, including periodic risk-based assessment and timely remediation.

3.2 Assessment method at the Library The self-assessment at the Library is a systematic review conducted to provide assurance on internal control over financial reporting.

In 2010-2011, a scoping and planning exercise was undertaken to identify key business processes and to document financial statement assertions and control categories.
Key business processes and sub- processes were identified, documented and the design effectiveness was tested.

In 2011-2012, the Library assessed the operating effectiveness of the key controls in the areas of compensation, goods and services and financial systems access security.

25 4.

Assessment results as of March 31, 2012 During 2011-2012, the Library has continued to make solid progress in assessing and improving its key financial controls.
The recommendations from the design effectiveness assessment completed in 2010- 2011, were addressed in the following areas: • Financial system access controls have been strengthened.

New functional classes have been created to reflect the proper user access and segregation of duties.

• Goods and Services – enhanced commitment authority for collections and collaborative arrangements are now in place.
The Library also completed the following activities for compensation, goods and services and financial systems access security: • Completed the test of operating effectiveness through process walkthroughs and testing of multiple transactions per process/sub-process; • Identified any necessary remediation plans to address any gaps or issues of operating effectiveness; • Reported the results of the alignment of the key internal controls with the process level risks and the identification of remediation plans.
On this basis, the Library has documented its approach and results in order to articulate its multi-year action plan and related implementation requirements.

There were no material deficiencies noted which would cause a significant weakness in internal controls over financial reporting.

The results from the test of operating effectiveness identified remediation requirements which have been addressed or remediation plans are in place.
Looking ahead, the Library will continue to ensure that controls are effective over time, taking into account the initial assessment as well as results from annual assessments and audit.
This will involve developing and implementing a well integrated monitoring program to raise awareness and understanding of the Library’s system of ICFR at all levels of the organization, equip staff with the knowledge, skills and tools needed to maintain a robust ICFR, and continue to assess the status of ICFR on an ongoing basis.

26 5.
26 5.

Library's action plan Building on progress to date the Library has developed a multi-year plan to fully implement the requirements of the Policy on Internal Control and is positioned to complete the main assessment of its system of ICFR for 2012-13 and complete implementation of an ongoing monitoring process in 2013- 2014.

The action plan below highlights the progress that the Library will be making in ensuring that an effective system of internal control over financial reporting is in place.
Scoping and Planning  Process Controls Completed 2012-2013 2013-2014 Completed 2012-2013 2013-2014 Documentation and identification of controls Compensation Goods and services Boutique Planning, budgeting and forecasting Preparation of financial statements Financial systems access security Test of Design Compensation Goods and services Boutique Planning, budgeting and forecasting Preparation of financial statements Financial systems access security Test of Operating effectiveness Compensation Goods and services Boutique Planning, budgeting and forecasting Preparation of financial statements Financial systems access security                   IT General Controls Completed 2012-2013 2013-2014 Documentation and identification of controls Test of design Test of operating effectiveness    27 Entity Level Controls Completed 2012-2013 2013-2014 Documentation and identification of controls Test of design Test of operating effectiveness    Monitoring On-going monitoring Completed 2012-2013 2013-2014  The Library is fully committed to this action plan.
However, attainment of the milestones identified above will be contingent on the Library being able to maintain its current level of resources to implement the requirements of the Policy on Internal Control.

Any major changes to the Library structure could certainly impact on the associated timelines.

The Library will update its action plan on an annual basis.

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