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Audit of compensation processes and controls: Significance

7. The implementation of Phoenix resulted in negative impacts on the federal government with thousands of employees being affected financially, including employees at the CBSA. In the Public Service, employees have been deferring promotions and job transfers, refusing overtime, and even delaying retirement because of eroding trust in Phoenix.Footnote 4

8. Reputational damage may occur when pay issues are covered in the media and may result in deterring qualified employees from joining the Agency. Inaccurate pay can also affect the wellness and productivity of employees as it may cause frustration and be detrimental to their emotional and financial health.

9. Inaccuracies in employee compensation, such as overpayments, can lead to financial loss for the Agency if not corrected. Given the materiality of the Agency's salary expenditure, it is important that the controls around this process work effectively to ensure it is reported in an accurate, complete and timely manner on the Agency's financial statements.

10. Furthermore, given the errors identified by the Office of the Auditor General (OAG) in their pay file reviews, as well as limited previous internal audit and internal control coverage in this area, a commitment was made in the Risk-Based Audit and Evaluation Plan 2019–2020 to conduct an internal audit of compensation.

11. The objective of this audit was to assess the adequacy and effectiveness of the governance and controls over the HR-to-Pay process, as well as to assess whether stakeholders have access to training and support to effectively execute the HR-to-Pay process.

12. The audit scope included the processes and internal controls over the HR-to-Pay lifecycle (including the timeliness and accuracy of pay actions) as well as controls over the financial reporting, governance and oversight of HR-to-Pay function, communication and training.

13. The audit scope and criteria can be found in Appendix A.

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