VAC’s response to the Office of the Comptroller General’s Internal Audit of the Escalation Process for Veterans Affairs Canada’s Disability Pension

Consult the Office of the Comptroller General’s Internal Audit of the Escalation Process for Veterans Affairs Canada’s Disability Pension.

Recommendation 1

Veterans Affairs Canada should ensure that roles and responsibilities for calculating escalation rates for all of its benefits:

1. are further defined;
2. identify accountabilities for the escalation process, including for review or challenge of inputs and assumptions affecting the escalation calculation;
3. are periodically reviewed, updated and communicated to those with roles and responsibilities in the escalation process. This review could consider duplicate or overlapping control responsibilities, organizational changes, and continued relevancy and accuracy;
4. are implemented and their completion is documented.

Management Response:

Management agrees with this recommendation. Key control documents have been reviewed and updated to clearly define roles and responsibilities for all areas within the Department. These control documents include an overview of roles and responsibilities, a record of all programs which are escalated, detailed procedures, individual worksheets for each calculation, and a checklist for each individual involved in the process to ensure accountability and to document actions taken. These strengthened control documents were utilized for the 2020 escalation calculation and will continue to be reviewed and updated annually.

Target: Complete

Action Steps	Office of Primary Interest	Target Date
1.1 Review and update the following control documents to clearly establish roles and responsibilities for calculating escalation rates (early drafts were shared with the OCG team in August 2019 and all feedback received was incorporated into the final version): description of roles and responsibilities for all stakeholders involved in the process; listing of all VAC programs and benefits to identify which are escalated as well as the relevant Legislation/Regulations; detailed procedures for the completion of the calculations; calculation worksheets; a checklist for all stakeholders involved in the process to document actions completed; and, annual quality assurance review by VAC Financial Attestation Unit to ensure compliance with procedures and appropriate update of all documents and procedures (established in 2015) all documents are available to stakeholders through GC Docs.	Director General, Finance	Complete
1.2 Updated documents are approved by the Director General, Finance Division. DCFO approved in October 2019 and these documents were utilized for the 2020 calculation year.	Director General, Finance	Complete
1.3 Final documents are submitted to the Chief Financial Officer as well as shared with Service Delivery, Policy, Information Technology and the Department of Justice, as appropriate. Documents shared directly with key stakeholders as well as available on GC Docs.	Director General, Finance	Complete
1.4. Checklists signed by all staff involved in the process are maintained on file annually to document that key steps were followed. Roles and Responsibilities outline this as a requirement and signed checklists for all staff involved in the process was completed for the 2020 calculation year. Verification is completed by the Attestation Unit and a record of all signed checklists is maintained on file.	Director General, Finance	Complete

Recommendation 2

Veterans Affairs Canada should ensure that interpretations of legislation used in the escalation calculation are:

1. obtained from, as well as regularly confirmed and validated with, relevant internal and external sources;
2. documented and approved;
3. used when determining assumptions for and inputs to the escalation calculation, and are incorporated in the supporting tools;
4. considered as part of any changes to the calculation methods.

Management Response:

Management agrees with this recommendation. As part of the review and update of key control documents, the details of each calculation for all programs has been confirmed with the references to the relevant legislation, policy or procedure clearly documented. Additionally a process for periodic review at least every three years has been established. Any areas requiring interpretation will be validated through consultation with the Department of Justice.

Target: Complete

Action Steps	Office of Primary Interest	Target Date
2.1 The following documents have clear references to the interpretation of legislation used in escalation calculations: It is a defined role and responsibility in the description of roles and responsibilities for all stakeholders involved in the process including the requirement for internal/external consultation for any decisions that could impact the interpretation or calculation of escalation; All the relevant Legislation/Regulations are identified in the list of all VAC’s programs and benefits as well as the calculations worksheets; Roles and responsibilities identify the requirement for broad consultation at least every three years to confirm the interpretations are still appropriate and properly applied to calculations; and Documented legal advice is required for any key interpretations.	Director General, Finance	Complete
2.2 Updated documents are approved by the Director General, Finance Division. DCFO approved in October 2019 and these documents were utilized for the 2020 calculation year.	Director General, Finance	Complete
2.3 Final documents are submitted to the Chief Financial Officer as well as shared with Service Delivery, Policy, Information Technology and the Department of Justice, as appropriate. Documents shared directly with key stakeholders as well as available on GC Docs.	Director General, Finance	Complete
2.4. Checklists signed by all staff involved in the process are maintained on file annually to document that key steps were followed. Roles and Responsibilities outline this as a requirement and signed checklists for all staff involved in the process was completed for the 2020 calculation year. Verification is completed by the Attestation Unit and a record of all signed checklists is maintained on file.	Director General, Finance	Complete

Recommendation 3

Veterans Affairs Canada should ensure that:

1. a record of all of its programs and benefits subject to escalation is:
   1. developed and specifies, in a consistent way, the manner in which the benefits are escalated, as well as the applicable legislation;
   2. periodically reviewed, updated and communicated to those involved in the escalation process;
2. any errors or discrepancies between legislative requirements and the ways in which its programs are currently being escalated that are found as a part of the identification and maintenance processes in (a) above are reported to senior management governance bodies and addressed in a timely manner.

Management Response:

Management agrees with this recommendation. A record of all programs which are escalated was updated with detailed specifics. Additionally, key control documents have been updated which included the individual calculation worksheets for each program. An independent annual review of all calculations will continue to be completed by the Attestation Unit. Any decisions related to escalation will be reported to senior management governance bodies and documented.

Target: Complete

Action Steps	Office of Primary Interest	Target Date
3.1 The listing of all VAC programs and benefits to identify which are escalated as well as the relevant Legislation/Regulations also includes how and when; it describes the calculation method and when these benefits must be escalated. This document is reviewed annually and updated as required. VAC will continue to look at when legislation is opened up for amendments to align the how and when of escalation calculations.	Director General, Finance	Complete
3.2 Updated documents are approved by the Director General, Finance Division. DCFO approved in October 2019 and these documents were utilized for the 2020 calculation year.	Director General, Finance	Complete
3.3 Final documents are submitted to the Chief Financial Officer as well as shared with Service Delivery, Policy, Information Technology and the Department of Justice as appropriate. Documents shared directly with key stakeholders as well as available on GC Docs.	Director General, Finance	Complete
3.4 Any decisions related to escalation are made based on consultation with senior management governance bodies.	Director General, Finance	Complete

Recommendation 4

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