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Departmental Performance Reports

2006-07

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IV. Other Items of Interest

IV.1 Internal Services

Internal Services at OSFI include: Finance and Corporate Planning, Information Management and Technology, Human Resources, Communications and Public Affairs and Legal Services. To facilitate government-wide roll-ups, the costs of these program support activities are allocated to each program activity to present the full program costs. The following table illustrates how OSFI’s 2006-2007 actual Program Support costs are allocated to its other program activities.

 


($ thousands)

Program Activity

Regulation and Supervision of Federally Regulated Financial Institutions

Regulation and Supervision of Federally Regulated Private Pension Plans

International Assistance

Office of the Chief Actuary

Total -2006-2007 Actual

Finance and Administration*

12,290

693

176

558

13,717

Information Management and Technology

12,207

688

175

555

13,625

Human Resources

2,677

150

38

122

2,987

Communications

2,053

116

29

93

2,291

Legal

206

12

3

9

230

TOTAL

Internal Services

29,433

1,659

421

1,337

32,850

 

* Includes the Assistant Superintendent’s Office, Security Services, the Internal Audit function and the secretariat of the Audit Committee.

For 2006-2007, OSFI had identified two priorities relating to internal services with specific initiatives that supported all programs. These activities have been described in Section II. 3. Following is a general description of some of the corporate support initiatives that were undertaken in 2006-2007 and an explanation of how they affected OSFI’s performance.

OSFI’s significant incremental Information Management/Information Technology investments during 2006-2007 were in support of the New Capital Adequacy Framework (Basel II), Business Intelligence tools for its Monitoring and Analytics Support Division, and Phase III of a corporate Electronic Document Management System (EDMS). During 2006-2007, OSFI:

  • completed within its set timeline and budget the implementation of EDMS Phase III. EDMS allows OSFI employees to manage electronic documents better and to share information.
  • substantially completed its implementation of enabling technologies for enhanced reporting and analytics to support its supervisory and regulatory activities (Business Intelligence tools). These tools offer supervisors more capability to analyze data from, and information pertaining to, the regulated financial institutions.
  • implemented a Management of Information Technology Security (MITS) action plan to ensure readiness and effective management of security incidents and adequate protection of information.

During 2006-2007, OSFI enhanced its governance and accountability framework through increased capacity in its Internal Audit function and the appointment of four independent members to its Audit Committee. OSFI also made further progress in implementing Enterprise-wide Risk Management (ERM), a contemporary management tool that provides a comprehensive and integrated approach to identifying risks and assessing the quality of risk mitigants. For the second consecutive year, ERM self-assessments were deployed during 2006-2007 to the divisional levels as part of the annual planning process.

OSFI continued to enhance its succession planning to include all critical high risk areas, and further strengthened its Human Resources planning process; both of these planning processes are now integrated with OSFI’s annual planning cycle. OSFI also implemented the necessary policies, processes, training and communication plans to ensure compliance with the Public Service Modernization Act.

Training continued to be a high priority at OSFI. A significant portion of OSFI’s training efforts were focused on the implementation of enabling technologies such as Basel II, EDMS and Business Intelligence. In addition, OSFI continued with the delivery of the corporate-wide mandatory leadership training program for front-line managers and directors.

OSFI also focused during 2006-2007 on Business Resumption Planning and Pandemic Planning by updating its emergency preparedness tools, facilities and processes to ensure effective recovery and continuity of critical services and introducing preventative measures to minimize potential impacts on its employees.

 

IV.2 Program Support Priorities

OSFI has two Program Support Priorities that support the Program Activities. These two Priorities and their performance information are discussed below.

 

 PRIORITY 9  


Priority 9: High-quality internal governance and related reporting.

Description

  • Ensure that OSFI is well managed in accordance with the accountability expectations of Parliament, the Treasury Board Secretariat and the federal Management Accountability Framework.
  • Enhance the internal audit function.
  • Review the performance measurement framework.

Key Expected Results

  • OSFI's financial results accurately reflect its financial position.
  • Programs and activities are operating within applicable policies, acts and guidelines.
Key Performance Measures / Achieved Results Ratings

1. OAG audits confirm financial controls. Source: Financial Statement Audits by the Office of the Auditor General

  • Since fiscal year 2000-2001, OSFI’s financial statements have been audited annually by the Office of the Auditor General. OSFI has received an unqualified audit opinion each year, up to and including 2006-2007. This attests that OSFI’s financial statements present fairly, in all material respects, its financial position at year-end and the results of its operations and its cash flows for the year ended in accordance with Generally Accepted Accounting Principles (GAAP) for the private sector.

2006-2007 – Met expectations

2005-2006 – Met expectations

2004-2005 – Met expectations

2. Internal Audit finding that operational controls are in place and operational units are operating within applicable policies, acts and guidelines. Source: Internal Audit Reports.12

  • Internal Audit has developed a risk-based audit plan and a comprehensive policy and procedures manual for the audit function. Audit reports, which include management’s response to any identified issues, are posted on OSFI’s Web site. These reports identified several opportunities for the improvement of certain policies and practices. Action plans to deal with these matters are underway and on track. More details can be found in this Department Performance Report in Section III.2, Table 10 Internal Audit or Evaluations

2006-2007 – Met expectations

2005-2006 – Met expectations

2004-2005 – Met expectations

3. NEW Assessment of OSFI’s Results-based Management Accountability Framework. Source: Treasury Board Secretariat

  • OSFI completed a Treasury Board assessment of its Management Accountability Framework during 2006-2007. The results of this assessment and OSFI’s action plan in response to it are posted on OSFI’s Web site at www.osfi-bsif.gc.ca/osfi/index_e.aspx?DetailID=1619. OSFI is committed to management excellence and considers the MAF process an important means of assessing performance.
  • OSFI achieved “notable” results for the following indicators: Effective Planning Function, Portfolio Management, Financial Reporting, Information and Decision Making, Risk Management, Human Resources Planning and Financial Analysis.
  • OSFI was also commended for its efforts in developing the internal audit function under the new Treasury Board Policy on Internal Audit. OSFI maintains a strong working relationship with the Office of the Comptroller General (OCG) and is assisting the OCG in piloting their new maturity assessment model for further developing internal audit within the government.
  • Treasury Board suggested three areas where OSFI needs to focus during 2007-2008: Official Languages – Language of Work, Employment Equity and Performance Reporting.

2006-2007 – Met expectations

2005-2006 – N/A

2004-2005 – N/A

Performance Discussion

Steps taken during the year in support of this objective include:

  • OSFI prepared an action plan to increase the percentage of bilingual supervisors and implementation of the plan is well underway. As at December 2006, OSFI had achieved a two percent increase (vs. the MAF assessment) in the number of bilingual supervisors, and further increases are expected as implementation continues.
  • OSFI closed the gap in one area of Employment Equity. As at December 2006, OSFI had exceeded the MAF’s targeted percentage for aboriginal representation. In addition, the overall representation of visible minorities at OSFI exceeded workforce availability.
  • For the second consecutive year, Enterprise-wide Risk Management self-assessments were deployed during 2006-2007 to the divisional levels as part of the annual planning process.
  • 2006-2007 was the first year of the operation of the Independent Audit Committee, which met 6 times over the course of the year.
  • Treasury Board approved OSFI to be recognized as a “Large Department and Agency” under the Internal Audit Policy.
  • OSFI established a performance measurement framework across OSFI and the Office of the Chief Actuary for external and management reporting.
  • During 2006-07, OSFI fully implemented the Treasury Board Policy on Internal Audit and further enhanced its governance and accountability framework through increased capacity in its Internal Audit function. OSFI also increased the number of internal audits performed in the fiscal year and appointed an independent member as Vice-Chairperson so as to further enhance the Committee’s independence.
  • OSFI participated in a number of government horizontal audits (e.g., travel and hospitality, staffing process), the results of which will be available during 2007-2008.
  • Audit reports, which include management’s response to any identified issues, were reviewed by the Executive and Audit Committees at regularly scheduled meetings and were posted on OSFI’s Web site.
  • During 2006-2007, OSFI published the first edition of its external newsletter, The OSFI Pillar. The newsletter is designed to provide stakeholders with a reminder of the latest guidelines, notices, public statements, and other pertinent information released by the Office. The name reflects OSFI’s prudential mandate, to regulate and supervise in a manner that contributes to the strength of Canada’s financial system.
  • OSFI continued to post on its Web site the Superintendent’s speeches and appearances before Parliamentary Committees.

Steps planned for the future to improve performance include:

  • OSFI will incorporate internal performance measures recently developed into external reporting.
  • Once the results of the government’s 2006-2007 horizontal audits are available, OSFI will assess any audit findings and determine whatever measures are necessary.
  • In 2007-2008, OSFI will investigate what further enhancements to its Web site may be required in support of the government’s Common Look and Feel initiative and prepare its implementation plan. The new standards are to be completed by December 31, 2008.
Resources: Included in Priorities 1 to 6
12 Seven audit reports are now available on OSFI's Web site under About OSFI/ Reports/ Internal Audit Reports. Four of these reports were published during 2006-2007, as per the Audit Plan (see Table 10 of this DPR for more information).  OSFI expects that, based on the findings and recommendations of these audit reports, continual improvement will take place.

 

PRIORITY 10


Priority 10: Resources and infrastructure necessary to support supervisory and regulatory activities.

Description

  • Develop and implement cost-effective information management systems that contain relevant, accurate and timely internal and external data.
  • Maintain a robust technology infrastructure that meets acceptable security and performance standards.

Expected Results

  • High quality staff and a motivated and skilled workforce.
  • Program support is efficient and delivers services at reasonable cost and turn-around time relative to peers.
  • A cost-effective, secure and robust technology infrastructure
Key Performance Measures / Achieved Results Ratings

1. Knowledgeable observers are of the view that OSFI has high quality staff. Source: 2007 Report on Actuarial Consultations13

  • In the fall of 2006, OSFI commissioned The Strategic Counsel, an independent research firm, to conduct a confidential consultation with insurance companies, to explore perceptions of the current insurance marketplace, of OSFI in general, and of the work of OSFI’s actuarial division in particular. Participants generally held positive impressions of the knowledge of OSFI staff dealing with actuarial matters in core areas. Some areas for improvement were noted, including increasing the level of expertise in certain technical areas and increasing the complement of staff dealing with actuarial matters.

2006-2007– Met expectations (for actuarial staff)

2005-2006 – Met expectations (for pension staff)15

2004-2005 – N/A

2. External reviewers find OSFI's Program Support to be efficient.

No external measures were undertaken for the period in review.

 

2006-2007 – N/A

2005-2006 – Met expectations

2004-2005 – N/A

3. Employee Survey finds that OSFI employees are motivated.

No employee survey was conducted during the period in review. The next one is planned for 2007-2008.

 

2006-2007 – N/A

2005-2006 – 82%

2004-2005 – N/A

4. NEW 360 Feedback Source: HAY 360 Feedback process14

  • In 2005-2006, OSFI introduced a 360-degree feedback process for all executive staff, which led to personalized development plans in the 2006-2007 performance management process. A review of the 360 results showed that leadership training and attention to specific goals led to improved scores from last year’s 360.

2006-2007 – Score 5.7 (target 5.3)

2005-2006 – Score 5.5 (target 5.3)

2004-2005 – N/A

5. Internal tracking of IM/IT infrastructure performance

  • Completed Phase 3 of the EDMS project, enhancing the business's ability to manage core information assets in accordance with Treasury Board Information Management policies and reorganizing the balance of OSFI's electronic records to improve information sharing.
  • Enhanced reporting and analytics capabilities for the Banking Industry, and completed work on enhancements for the Property & Casualty and Life Insurance industry, delivering key monitoring functionality to the MASD Group in Supervision.
  • Completed the development of new reporting and analytics capabilities in accordance with Basel Accord requirements -the Basel II initiative.
  • Commenced the redevelopment of core Pensions Supervision Systems capabilities, focusing on the technical enablement of the Pensions Approvals process .

2006-2007 – Met expectations

2005-2006 – Met expectations

2004-2005 – Met expectations

 

Performance Discussion

Steps taken during the year in support of this objective include:

  • Conducted vulnerability assessment and penetration test on the network infrastructure.
  • Conducted a Threat and Risk Assessment on all new technology proposed.
  • Reviewed the Security Management Services provider to enhance and ensure our response capacity.
  • Initiated a full IT Threat and Risk Assessment with expected results to be delivered in the 07-08 fiscal year.
  • Training plans were delivered as scheduled, resulting in improved employee satisfaction, and in addressing skills gaps.
  • OSFI continued to address HR planning by focusing on divisional and sector HR plans, and aligning HR planning with business planning. All divisions have now developed their own specific HR plans, and these have been rolled up into sector-specific plans.
  • OSFI initiated a review of its compensation survey program with a resulting change to a different survey that more closely matches with the financial industry.
  • Introduction of new business intelligence capabilities.
  • Continuing roll out of information management tools.
  • Quarterly staffing plans were implemented in 2006-2007. A review of staffing actions taken against planned needs showed that sectors were successful in delivering against their plans.
  • Quarterly reviews by OSFI's Executive Committee of staffing activities showed that OSFI complies with the staffing values of the Public Service Employment Act.

Steps planned for the future to improve performance include:

  • Implement the approved recommendations from the TRA.
  • Continue to ensure a stringent approval process for new proposed technologies.
  • Ensure coordinated approach from the various sections in support of Infrastructure technology projects and programs.
  • Continue with the MITS implementation process.
  • Continue with the implementation of the IT Security Policy Framework.
  • Review the results of the insurance consultation and come up with options to address findings related to actuarial expertise.
  • OSFI will continue to ensure HR planning is an integral part of business planning and will continue to review its HR needs in light of changing business priorities, succession and GoC policy.
  • OSFI will conduct an employee survey to measure satisfaction and a compensation survey to evaluate its current compensation strategy.
  • Continuing roll out of new business intelligence capabilities.
  • Replacement of Pensions Management legacy systems.
Resources: Included in Priorities 1 to 6

13Source: See footnote 4

14Source: OSFI’s 360 process is based on a model developed by the HAY Group, a management consultancy specializing in HR services. Peers, managers and direct reports use a seven point scale to rate competencies. OSFI adopted a target average score of 5.3, which is the level at which HAY considers a competency a strength. The actual average is calculated from the ratings received for three competencies: Developing Others, Team Leadership and Managing Change. Rating forms were submitted anonymously to HAY.  All of OSFI’s REX staff with direct reports participated in the 360 process:  75 in 2005-2006 and 76 in 2006-2007. 

15Source: See footnote 8.

 

IV.3 Government Priorities and Other Initiatives

This section summarizes OSFI’s involvement in a number of government-wide initiatives.

Results Based Management and Accountability Framework
 The Results Based Management and Accountability Framework (RMAF) is the continuation of Modern Comptrollership and its management practices that OSFI implemented in 2003-2004. During 2006-2007, OSFI completed a Treasury Board assessment of OSFI’s Management Accountability Framework. The results of this assessment and OSFI’s action plan in response to it are posted on OSFI’s Web site under About OSFI/ Reports/ Management Accountability Framework.

OSFI is well positioned already with respect to RMAF, however, monitoring mechanisms for, and reporting on, performance measures remain areas to focus and work on.

Program Activity Architecture
 Effective 2004-2005 OSFI implemented the Program Activity Architecture (PAA), as recommended by the Treasury Board Secretariat, as part of the federal government’s commitment to strengthen oversight and accountability. OSFI also developed a performance measurement framework and a suite of measures corresponding to its PAA, which was largely implemented in 2005-2006. More details can be found on OSFI’s Web site in the Report on Plans and Priorities 2006-2007 to 2008-2009, posted on OSFI’s web site under About OSFI/ Reports/ Reports on Plans and Priorities.

OSFI commenced work in 2006-2007 towards implementing the Treasury Board Secretariat’s Management Resources and Results Structure (MRRS) Policy. During 2007-2008, OSFI will further review its performance measurement framework and measures, in particular at the strategic outcome level.

Risk Based Audit Framework (RBAF)
 OSFI’s Risk-Based Audit Framework has been established through assessing risk by incorporating Enterprise-wide Risk Management (ERM) results as well as an assessment of materiality and public visibility. Ongoing program monitoring, internal auditing and reporting strategies remain areas to focus and work on.

OSFI’s Audit Committee comprises four independent members, who represent a majority of the committee. During 2006-2007, OSFI appointed an independent member as Vice-Chairperson so as to further enhance the Committee’s independence. During 2006-07, OSFI established a plan to fully implement the Treasury Board’s policy on Internal Audit within the timeframe required by TBS, and took many steps to this end. OSFI also increased the capacity in its Internal Audit function and the number of internal audits. OSFI also participated in a number of government horizontal audits, the results of which will be available during 2007-2008.

Internal Audit reports are reviewed by the Executive and the Audit Committees at regularly scheduled meetings and are posted on OSFI’s Web site.

Proactive Disclosure
 In accordance with federal government policies introduced in 2004, OSFI published information on travel and hospitality expenses incurred within OSFI by the Superintendent, Assistant Superintendents and Chief Actuary, as well as information on contracts over $10,000 issued by or on behalf of OSFI.

Effective spring 2006, the disclosure of Grants and Contributions is also required. All proactive disclosure information is updated every three months on OSFI’s Web site.

Acts, Legislation and Regulations
 Information on the Acts, Legislation and Regulations administered by or impacting OSFI can be found on the OSFI Web site, www.osfi-bsif.gc.ca, under About OSFI / Legislation. The acts can be found on the Justice Canada Web site under “Laws” at http://laws.justice.gc.ca.

 

IV.4 Other References

Headquarters
 Office of the Superintendent of Financial Institutions Canada
255 Albert Street
16th Floor
Ottawa, Ontario
K1A 0H2

Telephone: (613) 990-7788
Fax: (613) 952-8219
Web site: www.osfi-bsif.gc.ca

Publications
 Please see OSFI Web site www.osfi-bsif.gc.ca for details.



Date Modified: 2007-11-01
 
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