Opening Statement before the Standing Committee on Public Accounts

Report of the Joint Auditors to the Board of Directors of the Public Sector Pension Investment Board

(Special Examination Report—2021)

15 February 2022

Andrew Hayes
Deputy Auditor General

Mr. Chair, thank you for this opportunity to discuss the results of our special examination of the Public Sector Pension Investment Board. I want to start by acknowledging that this hearing is taking place on the traditional unceded territory of the Algonquin Anishinaabeg People. I am accompanied today by Mélanie Cabana, who led this audit on behalf of our office, and by Victoria Loutsiv, who is a partner with the accounting firm Deloitte. Our office and Deloitte are the appointed joint auditors of this Crown corporation.

The Financial Administration Act requires that a special examination be carried out at least once every 10 years to assess whether a Crown corporation’s systems and practices provide reasonable assurance that its assets are safeguarded and controlled, its resources are managed economically and efficiently, and its operations are carried out effectively. We report a significant deficiency when, in our opinion, the corporation could be prevented from having such reasonable assurance.

The Public Sector Pension Investment Board plays the significant role of investing and managing contributions from the pension plans of the public service, the Canadian Armed Forces, the Royal Canadian Mounted Police, and the Reserve Force. This special examination focused on selected corporate management practices and on the management of the corporation’s investments and operations. I am pleased to report that the corporation had good systems and practices for managing its investments and operations. We found no significant deficiencies as a result of our audit work.

However, we noted potential for improvement in areas not related to the management of investments, such as performance measurement and performance monitoring, and reporting. For example, the corporation had set several strategic objectives but did not have targets for measuring progress against these objectives in areas that included talent management, and diversity and inclusion. As a result, the corporation did not consistently report to the Board of Directors on some of these performance indicators and targets. Without this information, it is difficult for the board to monitor the corporation’s performance and for management to track progress against strategic objectives and take corrective action as required.

We also noted that improvements were needed in risk mitigation and risk monitoring, and reporting. For example, the corporation lacked risk appetite metrics, thresholds, or limits for some significant non‑investment risks in certain areas such as human resources planning. Without such thresholds and limits, management cannot make effective decisions to address these risks in line with the risk appetite statement approved by the board.

Our office has committed to assessing and reporting on the United Nations’ Sustainable Development Goals across all our audit work, to support Canada’s progress on this important international commitment.

During this audit, we noted that the corporation integrated environmental, social, and governance considerations into its decision making, and its investments indirectly addressed 3 of the United Nations’ goals. There is an opportunity for the corporation to enhance its reporting on the sustainability of its investment activities to more clearly link to the Sustainable Development Goals.

The corporation agreed with our recommendations and prepared an action plan. As our audit work was completed in October 2020, I cannot comment on the corporation’s progress in implementing its plan, but I expect the corporation’s officials will be happy to update the committee.

Mr. Chair, this concludes my opening remarks. We would be pleased to answer any questions the committee may have. Thank you.