Audit of compensation processes and controls: Introduction

1. The Canada Border Services Agency (CBSA or Agency) employs over 16,000 staff, including indeterminate and determinate employees, that account for $1.7 billion in annual payroll expense. Compensation refers to cash and non-cash remuneration and includes wages, salaries, pension benefits, paid time off and allowances. In order to remain compliant with federal regulations, policies and collective agreements, employees must be accurately compensated in a timely manner. Failure to do so may result in loss of trust between employees and the Agency, challenges with the retention of qualified personnel and may ultimately affect the ability to meet our mandate.

2. The Agency's HR-to-Pay process includes the information, systems and staff responsible for processing and reporting payroll. Many stakeholders are involved in the HR-to-Pay process including key functional areas in the Human Resources Branch (HRB) and the Finance and Corporate Management Branch (FCMB), as well as Cost Centre Managers and employees across the Agency.

3. The CBSA has a Memorandum of Understanding with the Canada Revenue Agency (CRA) for information technology (IT) services, allowing the Agency to use CRA's Corporate Administrative System (CAS), which is an SAP based system, to manage its human resources and finance activities, including payroll.

4. The Government of Canada implemented a new payroll software called 'Phoenix' in 2016 to centralize pay operations across all departments and agencies. The Agency is referred to as a 'web-service organization' (also known as a 'Non-Pay Centre' organization), which means the Agency uses its own HR system (CAS) to interface with Phoenix and is not a client of Public Services and Procurement Canada's (PSPC) Pay Centre. The Agency's Compensation Advisors use CAS to process pay actions. Pay information is then transmitted to the Phoenix system to pay employees.

5. The transition to Phoenix had a significant impact on the Agency's HR-to-Pay process, systems and employees. Since its implementation, Phoenix has not functioned as intended, has led to a high number of incorrect payments, and increased the need for manual intervention.^{Footnote 1} In order to ensure that employees were paid accurately and on time, the Agency has taken measures to address Phoenix-related issues by:^{Footnote 2}

• investing over $5.8 million to resolve complex-on-going integration issues between CAS and Phoenix through the Pay Modernization project
• establishing oversight functions, supported by internal dashboards and trackers
• implementing a process for priority payments for emergency pay requests, including a streamlined financial process and courier services for the delivery of urgent payments
• applying a tiered approach to process compensation requests
• attending external working groups within the HR Government of Canada community to raise concerns and discuss issues faced by CBSA

6. Following several years of systems issues and capacity limitations, a backlog of current and prior year compensation cases has built up. The HRB tabled a strategic plan to the Human Resources Executive Committee in February 2020 to address the backlog (Compensation Backlog Strategy). The Agency had 2,578 backlog cases in December 2020, 14% of which refer to cases from 2018 or earlier.^{Footnote 3} Although the backlog is being reduced, compensation staff are still required to address a high number of pay transactions on a monthly basis.