hr / finance interactions financial systems authority...

HR / Finance Interactions

Financial Systems Authority (FSA) Office of the Comptroller General

(OCG)

fmi*igf PD Week, Le Francophile

2009-11-26

HR / Finance Interactions Project

22

Presentation Objectives

• Review the background, objectives and scope for the Control

Framework for Human Resource/Finance Interactions Project

• Provide an overview of project results and its value to departments

and agencies:

– The Pay Administration Model

– “Other” HR/Finance Interactions Model

– The Pay Administration Control Framework


33 3

Vision

Financial Systems Authority's (FSA) Vision, Mandate & Goals

Strategic decision-making through superior financial

management

To build effective and integrated business processes, data

and systems, while advancing community developmentMandate

GoalsStandardized

Business

Processes

Knowledgeable

Systems

Community

Responsive

Systems

Consistent

Information

... supporting strategic decision making through excellence in financial management


The Common Financial Management Business

Process Initiative

4

Using knowledge to perpetuate

process excellence


5

Common Financial Management Business

Processes (FM-BP) Initiative

Six pillars or ―domains‖ have been identified. HR/Finance Interactions was the first

to be reviewed.


6

The HR/Finance Interactions Domain

• Run by OCG Financial Systems Authority (FSA) in collaboration with

both HR and Finance communities from multiple TB sectors, Public

Works and Government Services Canada (PWGSC) and departments

• Goal: to clarify operational roles, responsibilities and develop a control

framework to support the development of improved linkages between

Human Resource and Financial data, processes and systems.

• Deliverables – Guidelines and tools to the Directive on Financial

Management of Pay Administration

– HR/Finance Delivery Models

• for pay-related processes

• for other processes (non-pay-related)

– Control Framework for pay-related processes

• Potential follow on activities:

– Policy instruments supporting the control framework and delivery models

– Control Frameworks for other processes

6

Focus on Pay to:

Provide greatest return

Prove value


7

The HR/Finance Interactions Domain Background

• Complement and provide results to horizontal projects including:– PWGSC: Payroll Modernization

– Treasury Board:

• Chief Information Officer Branch (CIOB): Service Oriented Architecture - Bridge project: HR

Linkages, ERP Strategy

• Office of Chief Human Resource Officer (OCHRO): Common HR Business Processes

• Corporate Administrative Shared Services

• Provide a better understanding of the data and process interactions

between HR and Finance

• Provide a formal, common approach to HR/Finance controls for the Pay

Administration business process to support requirements under:– Auditable Financial Statements

– Federal Accountability Act

– Office of Comptroller General Policy Renewal (e.g., Policy on Internal Control)

• Address needs of all departments and agencies– Independent of financial and human resource management systems

– Can be adapted to include department specific and detailed processes, detailed roles,

responsibilities and organizations, and mapping to financial and human resource management

systems7


88

Timeline, Approach and Deliverables


9

Strategic Points from the HR/Finance Interactions

Domain

• Processes, Roles & Responsibilities last documented

in 1970’s

• Current policy and legislative requirements reflected • Practices may vary department to department and more formality

may be required in educating, communicating and applying

controls, for example, Pay Pre-Payroll processes (Compensation)

• Improved awareness of the activities and

responsibilities in processes and control between

Finance and HR Communities• Finding: Finance not always aware of existing HR processes &

controls and visa versa

• No major gaps found, however there is room for

improvement in collaboration between HR and Finance

HR/Finance Interactions Model

10

•Roles & Responsibilities

•Context

•Pay Administration Flow

•RACI Analysis


1111

HR/Finance Interactions Roles and Responsibilities


12

Pay Administration Context

12


13

Pay Administration Flow

13


Planning, Budgeting, Forecasting

Revenue & Accounts Receivable

Expenditure & Accounts Payable

14

“Other” HR/Finance Interactions Context

Planning, Budgeting, Forecasting• Integrated Planning and Reporting•Salary Management & Forecasting•Alignment of Organizational Structures & Authorities

Revenue & Accounts Receivable•Non-pay amounts due from an employee•Employee Separations•Transfers and Assignments (out/recovery)•Taxes

Expenditure & Accounts Payable•Non-pay amounts due to an employee• Interdepartmental settlements related to Workers Compensation•Garnishments or other court-ordered payments•Employee Separations•Transfers and Assignments (in/payment) •Benefits Accruals•Pay and Pay-related liabilities•Taxes

Materiel/Finance Interactions• Issuance• Retrieval• Inventory

Foundational analysis for

other domains of the FM-BP

initiative


15

Sample: HR/Finance Interactions RACI Diagrams

15

Pay – Pre-Payroll Processes

HR/Finance Touch

PointsRelated Data Responsible Accountable Consulted Informed

Authoritative

Source

Employee

information

• Name

• Start Date

• End Date

• Attributes

COMP COMP EE

MGR

PAY, FIN,

HR

HRMS

• Pay Office COMP PAY FIN,

HR, MGR

RG-CS

• Pay List

• Increment Date

COMP COMP PAY, FIN,

HR, MGR

HRMS

• Entitlements 1

(includes Base Pay)

COMP COMP MGR

HR

HR, FIN

PAY

HRMS

• PRI COMP PAY EE EE, HR,

FIN

MGR,

PAY

RG-CS

(Central

index)

Position Information • Financial coding 2 MGR /

COMP 3MGR FIN HR, PAY,

FIN

DFMS

• Classification /

BUD Code

• Attributes 3

• Position number

HR / COMP 3

HR MGR COMP

FIN

HRMS

See end of presentation for explanation of abbreviations

27 RACI diagrams were developed

Pay Administration

Control Framework (PACF)

16

• Sample Control Framework

• The PACF Processes


17

Approach to PACF Development

Analytical Framework– The Committee of Sponsoring Organizations (COSO) of the Treadway

Commission developed the Internal Control — Integrated Framework (the

COSO Framework).

17

Control objectives

Organizational levels of

responsibility

Control

components

• Monitoring,

Information &

Communications out

of scope


18

The PACF Control Processes

1. Create, implement and maintain departmental

policies and procedures to manage the

interaction among operational planning,

commitment control and salary management.


policies and procedures to manage the

delegation of financial authorities.


policies and procedures to manage HR

delegations.


policies and procedures for compliance to S.34.

5. Create, implement and maintain procedures to

ensure that authority under section 33 of the

FAA is exercised in accordance with the FAA

(including mechanisms to verify the legality of

the payment and the availability of funds).

6. Create, implement and maintain procedures to

ensure prompt initiation and accurate

completion of pay related requests.

7. Create, implement and maintain controls,

editing and rejection of payroll

transactions

8. Create, implement and maintain

departmental policies and procedures to

identify and address potential

overpayments, based on pre-determined

criteria (prior to the release of payment)

9. Create, implement and maintain criteria

for initiating recall/intercept

10. Create, implement and maintain

procedures to promptly correct erroneous

payments and ensure recovery action is

initiated.

11. Create, implement and maintain standard

processes for undelivered payments.

12. Create, implement and maintain month

end and year-end reconciliation and

reporting of departmental pay

expenditures and payroll control

accounts.


19

Sample: Pay Administration Control Framework

19

HR Pre-Payroll Processes

Control

Process

Control

Activity

Responsible Accountable Control Objective Control Risks ID

Create,

implement and

maintain

departmental

policies and

procedures to

manage the

delegation of

financial

authorities

Corporate

Finance

Deputy Head Compliance All pay related action

requests are

authorized by persons

delegated the required

financial authorities.

Employee pay is in

error, incomplete and/or

fraudulent and pay-

related processes occur

without the necessary

financial authority.

B-1

Create,

implement and

maintain formal

delegation of

authorities

matrix

Corporate

Finance

Minister and

Deputy Head

Compliance All pay related action

requests are



financial authority

Pay related processes

occur without the

necessary financial

authority

B-2

Create,

implement and

maintain

appropriate

division of

financial

responsibilities.

Corporate

Finance

Minister and

Deputy Head

Compliance All pay related action

requests are



financial authorities.

Employee pay is in

error, incomplete and/or

fraudulent.

B-3

51 control activities were identified


2020

For More Information

Check us out at : http://www.gcpedia.gc.ca/wiki/FM-BP

Or Contact: Mark Huard CGA

Director, Financial Business Processes and Renewal

Transformation Management, Capacity Building and Community

Development Sector

Office of the Comptroller General

613-946-4626

[email protected]

http://www.gcpedia.gc.ca/wiki/FM-BP



mailto:[email protected]




2121


2222

Simplified

Reconciliation

Project Value

Improved Results Management and Accountability

Control:

Objectives

Risks

Activities

Manage:

Overlap

Duplication

Control

Framework

Authoritative

Sources

Roles,

Responsibilities,

Accountabilities

Interoperability

Sharing

Integration/

Interfacing

People:

Functional

Owners &

Stakeholders

Data

HR/Financial Information

Accurate

Linked, Reliable & Relevant

Project Scope Enabled Results


2323

Key Functional Owners


2424

Project Linkages


25

RACI Diagrams: Acronyms & Abbreviations

25

HRMS Human Resource Management System – could be one or multiple departmental systems that handle

data related to areas such as HR Planning, Classification, Staffing, Learning and Development,

Compensation, Leave, Time and Reporting System, and Staff Relations.

DFMS Departmental Financial Management Systems – could be one or multiple systems that handle data

related to Finance, Material and Salary Planning.

RG-CS Receiver General (RG) and Compensation Systems (CS) at PWGSC defined as Regional Pay

System (RPS) including On-line Pay System (OLP), Standard Payment System (SPS), Payroll

System - General Ledger (PS-GL), Receiver General - General Ledger (RG-GL), Central Financial

Management Reporting System (CFMRS), and the Central Index. Note only PWGSC systems that

are relevant to the HR/Finance Interactions scope are listed here.

Authoritative Sources

EE Employee

MGR Manager

COMP Departmental Compensation function

HR All other departmental Human Resource functions

PAY PWGSC Compensation Sector

FPAD PWGSC Financial and Payroll Accounting Division (owner of PS-GL/Dept 79) and part of PWGSC

Compensation Sector

CAR PWGSC Central Accounting and Reporting

BCMS PWGSC Banking and Cash Management Sector

FIN Departmental Financial Services

CF Departmental Corporate Finance

MM Departmental Materiel Management

Roles Sources


26

RACI Diagrams Notes

Notes

1. Employee “Entitlements” include any amount paid to the employee, including base salary, due

to his/her status or achievements. Examples include base pay, bilingual bonus, and

supervisory differential.

2. Financial coding assigned to position (Responsibility Centre (RC), Program Activity (PA),

Project, etc.) may or may not be included in the detailed pay expenditure file. If the financial

coding is included in the detailed pay expenditure file, Compensation inputs this data into RPS.

3. Position attributes refers to characteristics of the position that affect pay once the position is

encumbered. Examples of these attributes are: exclusion status, geographic region (for certain

classifications) specific additional pay entitlements associated with a position (e.g., isolation

pay)

26


27

Approach to PACF Development

Policy Foundations and Context• TBS Policy on Internal Control (July 2008 draft)

– TBS Integrated Risk Management Framework (March 2004)

– TBS Policy on Internal Audit (2006)

• Documentation from the Committee of Sponsoring Organizations (COSO) of the Treadway Commission including:

– Enterprise Risk Management (ERM) – Integrated Framework (September 2004)

– Internal Control – Integrated Framework, Guidance on Monitoring Internal Control Systems, Volume II – Guidance (June 2008 draft)

• OCG’s Internal Audit Sector’s Core Management Controls (Draft November 2007)

• Comptrollership Policy on Pay Administration

– Appendix B, Delegation of financial authorities to human resource personnel –Elements of a control framework (April 1997)

• Key Definitions extracted from TBS Policy on Internal Control and OCG Core Management Controls and consistent with COSO definitions

27


28

HR Pre-Payroll Processes

Control

Process

Control

Activity

Responsible Accountable Control Objective Control Risks ID

Approach to PACF Development (cont’d)

28

COSO Control

Components

COSO

Organizational

Responsibilities

COSO Control

Objectives

COSO

Control

Components

Pay Administration

Model Context

hr / finance interactions financial systems authority...

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