Annual Integrated Audits and IT Audit Work
1. We recommend that the Saskatoon School Division No. 13 complete monthly reviews of the bank and investment reconciliations for The
Pension Plan for the Non-Teaching Employees of the Saskatoon Board of Education.
This chapter reports the results of our annual audit of the Ministry of Social Services and its three special purpose funds for the year ended March 31, 2019.
The Ministry complied with authorities governing its activities and had effective rules and procedures to safeguard public resources other than it needs to:
Properly support and approve social assistance payments to ensure eligible clients receive the correct amount of assistance
Review performance reports from third-party service providers timely
During the year, the Ministry improved its processes to disclose contractual obligations it expects to pay in the future.
Each fund complied with authorities governing their activities and their 2018–19 financial statements are reliable.
The mandate of the Ministry of Social Services is to help children be safe from abuse and neglect, and help individuals to meet their basic needs and participate in their community.1 The Ministry provides support through income assistance, child and family services, affordable housing and supports for people with disabilities as well as building capacity in community-based organizations.2 Key programs and services include childcare subsidies, adoption services, child protection, foster care, financial assistance and housing programs.3
In 2018–19, the Ministry spent $1.2 billion on delivering its programs (see Figure 1).
Appropriations (money from the General Revenue Fund) fund the Ministry. It also reported revenues totalling about $41 million primarily from Federal Government transfers (e.g., special allowances for children in care). The Ministry’s Annual Report for 2018–19 provides further details and reasons for differences between planned and actual results.
1 Ministry of Social Services, Annual Report for 2018–19, p. 3 (www.pubsaskdev.blob.core.windows.net/pubsask-prod/112646/2018-19SocialServicesAnnualReport.pdf) (4 October 2019).
2 Ibid.
3 Ibid.
Figure 1—Expenses by Program
Estimates
2018–19A Actual 2018–19
(in millions)
Central Management and Services $ 56.2 $ 50.7
Income Assistance and Disability Services 837.4 828.6
Child and Family Services 270.4 297.3
Client Support 12.4 12.4
Housing 7.6 7.2
Total Appropriation 1,184.0 1,196.2
Capital Asset Acquisitions (10.1) (2.3)
Capital Asset Amortization 5.5 5.4
Total Expense $ 1,179.4 $ 1,199.3
Source: Ministry of Social Services, Annual Report for 2018–19, p.18.
A During 2018–19, the Ministry received an operating budget increase of $23 million comprised of a supplementary estimate. It used the majority of the increase to fund Child and Family Community-Based Services, Income and Disability Services, and costs associated with the response to northern forest fires.
The Ministry is responsible for the Saskatchewan Housing Corporation, which has a December 31 year-end. We reported the results of our 2018 audit of the Saskatchewan Housing Corporation in our 2019 Report – Volume 1.
The Ministry is also responsible for the following funds with March 31 year-ends:
Social Services Central Trust Account
Social Services Valley View Centre Grants and Donations Trust Account and Institutional Collective Benefit Fund
Social Services Valley View Centre Residents’ Trust Account
In our opinion, for the year ended March 31, 2019, we found, in all material respects:
The Ministry of Social Services had effective rules and procedures to safeguard public resources except for matters described in this chapter
The Ministry of Social Services complied with the following authorities governing its and each of its funds’ activities related to financial reporting, safeguarding public resources, revenue raising, spending, borrowing, and investing except for the matter described in this chapter:
The Child and Family Services Act The Child and Family Services Regulations The Child Care Act, 2014
The Child Care Regulations, 2015 The Social Services Administration Act The Rehabilitation Act
The Employment Supplement Regulations The Personal Care Home Benefit Regulations The Rental Housing Supplement Regulations The Saskatchewan Assistance Regulations, 2014 The Saskatchewan Assured Income for Disability
Regulations, 2012
The Transitional Employment Allowance Regulations, 2005 The Saskatchewan Income Plan Act
The Seniors Income Plan Regulations The Executive Government Administration Act The Ministry of Social Services Regulations, 2007 The Financial Administration Act, 1993
Orders in Council issued pursuant to the above Legislation
The financial statements of each fund are reliable
We used standards for assurance engagements published in the CPA Canada Handbook
—Assurance (including CSAE 3001 and 3531) to conduct our audit. We used the control framework included in COSO’s Internal Control—Integrated Framework to make our judgments about the effectiveness of the Ministry of Social Services’ controls.
We focused our Ministry audit effort on the following areas:
Administration of the various programs (e.g., Saskatchewan assistance program, Saskatchewan assured income for disability) as prescribed by the legislation and policy manuals
User access, change management, and recovery processes for key financial IT systems
Process for identifying and recording contractual obligations
Reasonableness of method used to calculate the outstanding contingent liabilities
We recommended the Ministry of Social Services implement a process to appropriately identify and disclose contractual obligations.
(2018 Report – Volume 2, p. 96, Recommendation 1; Public Accounts Committee agreement December 11, 2018)
Status—Implemented
The Ministry implemented a process to appropriately identify and disclose contractual obligations.
The Contract Administration Unit revised its process to identify contractual obligations in 2018–19. At March 31, 2019, the Ministry had future contractual obligations of $513 million.
The process now includes clarification of data sources used in identifying contractual obligations, and revised roles and responsibilities for completing and reviewing contractual obligations.
Having a revised process allows the Ministry to appropriately identify and disclose contractual obligations.
We recommended the Ministry of Social Services follow its established processes that ensure only eligible clients receive assistance and that they receive the correct amount of assistance. (2000 Report – Volume 3, p. 221, Recommendation 2; Public Accounts Committee agreement June 6, 2001)
Status—Partially Implemented
The Ministry's employees do not always follow the Ministry's legislation or detailed policies and procedures for making payments to social assistance clients.
Legislation outlines benefits that the Ministry may pay to eligible clients (e.g., reasonable costs for funeral expenses).4 The Ministry's detailed policies and procedures further define the benefits. The Ministry expects staff to review and approve support for assistance payments to ensure only eligible clients receive the correct amount of assistance.
In 2018–19, 60% of 64 files we tested (2017–18: 61%) had assistance payments that were not appropriately approved in accordance with policy (e.g., approved when payment not properly supported). The following examples did not contain appropriate support:
27% of files (2017–18: 30%) with allowances. For example, in one instance, a client received a food-supplements allowance without appropriate documentation (i.e., receipts).
25% of files (2017–18: 25%) with utility arrears. For example, in once instance, the Ministry paid the utility arrears without adequate documentation (i.e., utility bill or disconnection notice).
3% of files (2017–18: 2%) had lack of appropriate approval. For example, in one instance, a client received a relocation allowance without appropriate approval.
The lack of compliance with Ministry legislation, and policies and procedures could result in the Ministry paying clients incorrect amounts of social assistance.
4 The Saskatchewan Assistance Act and regulations.
We recommended the Ministry of Social Services perform timely reviews on all the performance information submitted by the community-based organizations. (2007 Report – Volume 3, p. 75, Recommendation 4; Public Accounts Committee agreement January 8, 2008)
Status—Partially Implemented
The Ministry does not always review the results of the annual financial analysis of third-party service providers (i.e., community-based organizations) in a timely manner.
At March 31, 2019, the Ministry had service agreements with approximately 200 third-party service providers. During 2018–19, the Ministry paid these service providers roughly $416 million (2017–18: $357.9 million).5 The Ministry uses these service providers to provide services to at-risk residents of Saskatchewan who experience social, psychological, behavioural and cognitive difficulties. They also provide programs for persons with developmental disabilities, and the elderly.
Through service agreements with these third-party service providers, the Ministry requires them to submit various reports (e.g., operational and financial) within specified timeframes.
Management set a target to receive and review 90% of the quarterly and annual reports submitted within the specified deadlines (or inversely, 10% of the reports may be late).
In 2018–19, the Ministry showed improvement in its monitoring actions of third-party service providers and met its target of receiving 90% of the required reports by the required deadline as shown in Figure 2. If reports are not received by required deadlines, the Ministry documented evidence of following up with the service provider to ensure it receives the agreed upon services.
Figure 2—Lateness of Receipt of Reports of Third-Party Service Providers Report Type Submitted Deadline – Number of Days
After Organizations’
Period/Year-End A
Organizations with Late Reports 2018–19 B 2017–18
Quarterly financial report 30 4.5% 23%
Quarterly operational (e.g.,
program evaluation reports) 30 4.4% 11%
Annual financial statements 120 3.3% 17%
Annual operations report 120 6.7% 10%
A Third-party service providers’ year-end can be either March 31 or December 31.
B Stated figures show late reports that did not include documented follow-up in a timely manner.
Source: Ministry of Social Services agreements with third-party service providers and records.
Out of the 30 third-party service providers we tested, the Ministry received all the required reports except for one monthly report, which it requested from the service provider.
5 Ministry of Social Services Annual Report for 2018–19, p.19.
The Ministry also aims to complete its review of the annual financial statement analysis reports by November 30. The Ministry conducts the annual financial analysis to determine whether the community-based organizations (CBOs) are using the funding as expected. If they are not, the Ministry determines whether they will recover the excess funding or allow the surplus to be held by the CBO. For the 30 annual financial analysis reports we tested, the Ministry reviewed 73% after the deadline (lateness ranged between 11–185 days for completed files; five files were not completed and more than 200 days past the deadline date).
Not reviewing the financial analysis of the third-party service providers in a timely manner increases the risk the Ministry may be unable to identify issues and take necessary corrective action in a timely manner (e.g., adjust future funding).
This chapter reports the results of the annual audit of the Teachers’ Dental Plan for the year ended June 30, 2019.
The Teachers’ Superannuation Commission had effective rules and procedures to safeguard the Plan’s public resources except it needs to establish complete and written guidance for preparing interim and year-end financial reports, and prepare financial statements for the Plan.
During the year, the Commission complied with authorities governing the Plan’s activities related to financial reporting, safeguarding public resources, revenue raising, spending, borrowing, and investing.
During 2018–19, the Commission established written dental reconciliation procedures and completed monthly reconciliations for all dental payments made in the year. By reconciling approved dental claims to claims paid, the Commission is able to verify what the Plan owes for approved dental claims.
The Teachers' Superannuation Commission manages and administers the Teachers' Dental Plan. The Plan provides Saskatchewan teachers and their dependents with coverage for certain dental services. The Commission uses an insurance company (service provider) to help administer the Plan.
The Ministry of Education (through the General Revenue Fund) pays for all dental services covered through the Plan. During 2018–19, the Commission paid $13.2 million (2017–18:
$12.6 million) for teachers' dental claims and related administrative costs.
In our opinion, for the year ended June 30, 2019, we found, in all material respects:
The Teachers' Superannuation Commission had effective rules and procedures to safeguard the Plan's public resources except for the matters included in this chapter
The Teachers' Superannuation Commission complied with the following authorities governing the Plan's activities related to financial reporting, safeguarding public resources, revenue raising, spending, borrowing, and investing:
The Teachers' Dental Plan Act
The Teachers' Superannuation and Disability Benefit Act The Financial Administration Act, 1993
Orders in Council issued pursuant to the above legislation
We used standards for assurance engagements published in the CPA Canada Handbook—Assurance (including CSAE 3001 and 3531) to conduct our audit. We used the control framework included in COSO's Internal Control—Integrated Framework to make our judgments about the effectiveness of the Commission's controls.
Because dental payments made to members are significant, we tested a sample of dental payments to verify the eligibility and accuracy of the claims and compliance with governing authorities.
We recommended the Teachers' Superannuation Commission have adequate support for dental payments. (2009 Report – Volume 1, p. 57, Recommendation 2; Public Accounts Committee agreement September 1, 2009)
Status—Implemented
During 2018–19, the Commission established written dental reconciliation procedures and completed manual dental payment reconciliations for the 2018–19 fiscal year.
The Commission used financial data received from its service provider to determine the extent of dental claims the service provider approved and paid to teachers. This financial data helps the Commission determine how much it owes for approved dental claims.
Its service provider processes about 54,000 dental claims each year on behalf of the Commission. The Commission reimburses the service provider for claims it approved and paid.
As of June 2019, the Commission continued to develop a dental reconciliation IT system.
The Commission plans to perform dental reconciliations manually until implementation of this IT system.
By reconciling dental claims approved to claims paid, the Commission can verify what the Plan owes for approved dental claims. Going forward, the Commission can use this information to enable the Commission to manage the Plan on an accrual basis and to prepare adequate interim financial reports and year-end financial statements—see Section 4.2 for related recommendation.
We recommended the Teachers' Superannuation Commission establish complete and written guidance for preparing interim and year-end financial reports [for the Teachers' Dental Plan]. (2008 Report – Volume 1, p 46, Recommendation 6; Public Accounts Committee agreement June 17, 2008)
Status—Partially Implemented
We recommended the Teachers' Superannuation Commission annual report include the financial statements of the [Teachers' Dental] Plan the Commission administers. (2008 Report – Volume 1, p. 46, Recommendation 7; Public Accounts Committee agreement June 17, 2008)
Status—Partially Implemented
The Dental Plan is the only one of its active benefit plans for which the Commission does not publish financial statements or prepare interim financial reports.1
As noted in Section 4.1, the Commission's new dental reconciliation process is a critical step to enable the Commission to manage the Teachers' Dental Plan on an accrual basis, including preparing financial reports and statements on an accrual basis.2
Management plans to:
Complete written guidance for preparing interim and year-end financial reports for the Plan
Prepare financial statements for the Plan and include them in the Commission's Annual Report. The Commission expects to prepare financial statements starting in 2019–20
Without adequate interim and year-end financial reports, the Commission does not have sufficient financial information to make informed decisions about the Plan.
1 The Commission prepares financial statements for the Teachers’ Superannuation Plan and the Teachers’ Group Life Insurance Plan.
2 Consistent with prior years, the Commission provides summarized financial information about the Plan in its Annual Report.
Other than the need for a complete and tested business continuity plan, the Water Security Agency had effective rules and procedures to safeguard public resources as at March 31, 2019. The Agency’s 2018–19 financial statements are reliable and it complied with authorities governing its activities related to financial reporting, safeguarding public resources, revenue raising, spending, borrowing and investing.
The Agency is responsible for managing the water supply; protecting water quality and ensuring safe drinking water; managing dams and water supply channels; reducing flood and drought damage; and providing information on water. The Agency works to integrate all aspects of provincial water management to ensure water supplies support economic growth, quality of life and environmental well-being.1
At March 31, 2019, the Agency held financial assets (e.g., cash, amounts owed from others) of $135.1 million, tangible capital assets of $382.1 million, and liabilities of $39.2 million.
In 2018–19, the Agency generated an annual operating surplus of $61 million comprised of revenue of $115 million and expenses of $54 million.2 This included $35 million in revenue including the transfer of five water management structures (dams, canals, associated infrastructure land, headworks and building) with a carrying value of $0.4 million from Agriculture and Agri-Food Canada (AAFC)—an allotment of $20 million for the future operation, maintenance and upgrade of those five structures while the remaining $14.6 million relates to unanticipated risks associated with Reservoir Lands and other related infrastructure (20 water management structures in total) transferred from the AAFC to the Agency in 2017.
Our Office worked with MNP LLP, the appointed auditor, to carry out the audit of the Agency.
We followed the framework in the Report of the Task Force on Roles, Responsibilities and Duties of Auditors.3
1 Water Security Agency 2018–19 Annual Report, p. 4.
2 Find the 2018–19 annual report of the Water Security Agency at www.wsask.ca/About-WSA/Publications/Water-Security-Agency-Annual-Reports/.
3 See our website at www.auditor.sk.ca.
In our opinion, for the year ended March 31, 2019:
The Water Security Agency had effective rules and procedures to safeguard public resources except for the need for a complete and tested business continuity plan
The Water Security Agency complied with the following authorities governing its activities related to financial reporting, safeguarding public resources, revenue raising, spending, borrowing, and investing:
The Water Security Agency Act The Water Security Agency Regulations The Water Power Act
The Water Power Regulations The Crown Employment Contracts Act The Executive Government Administration Act The Financial Administration Act, 1993
Orders in Council issued pursuant to the above legislation
The Water Security Agency had reliable financial statements
We used standards for assurance engagements published in the CPA Canada Handbook—Assurance (including CSAE 3001 and 3531) to conduct our audit. We used the control framework included in COSO’s Internal Control—Integrated Framework to make our judgments about the effectiveness of the Agency’s controls.
We recommended the Water Security Agency implement and test a business continuity plan. (2010 Report – Volume 2, p. 296, Recommendation 1; Public Accounts Committee agreement January 20, 2011)
Status—Partially Implemented
In 2018–19, the Agency made limited progress on implementing this recommendation.
The Agency uses IT systems to monitor water quality and inspection data, provide real-time information on water levels throughout the province, manage financial information, and track key information about its capital assets (e.g., asset condition, inspection results, maintenance).
An IT disaster recovery plan is a part of a business continuity plan. By March 31, 2019, the Agency’s business continuity plan remained incomplete and untested. Without a complete and tested plan, the Agency risks the availability of its IT systems and data in the event of a disaster. The Agency plans to engage a consultant to assist with developing and testing a sufficient IT disaster recovery plan.
This chapter lists agencies that implemented recommendations from previous annual integrated audits and had no other significant integrated audit findings.
Figure 1 sets out, by agency, the recommendations, as well as highlights key actions taken by the agency to implement its recommendation.
Figure 1—Implemented Recommendations Past Recommendation
(Initial PAS Report, Date of Agreement of PAC or CCAC)A
Key Actions Taken During 2018–19 to Implement Recommendation Carlton Trail College
We recommended Carlton Trail College require staff to independently review and approve journal entries.
(2018 Report – Volume 2, p. 22, Recommendation 1; Public Accounts Committee has not yet considered this
recommendation as of October 25, 2019)
In 2018–19, Carlton Trail College required staff to independently review and approve journal entries.
The appointed auditor found staff independently reviewed and approved journal entries tested.
Ministry of Health
We recommended the Ministry of Health follow its established procedures for removing unneeded user access to its computer systems and data promptly.
(2015 Report – Volume 2, p. 64, Recommendation 1; Public Accounts Committee agreement June 12, 2018)
Our testing found the Ministry is promptly removing unneeded user access to its computer systems and data.
In 2018–19, the Ministry promptly requested removal of unneeded network user access for 30 of 31 (97%) individuals tested.
Ministry of Finance—Public Employees Benefit Agency We recommended the Public Employees Benefits
Agency have written procedures for verifying the completeness and accuracy of pension and benefit
Agency have written procedures for verifying the completeness and accuracy of pension and benefit