Core Control Audit of Canada Economic Development for Quebec Regions

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About this publication

Publication author : Canada Economic Development for Quebec regions

Publish date : February 4, 2014

Summary :

The objective of this audit was to ensure that core controls over financial management within CEDQ result in compliance with key requirements contained in the selected financial legislation, policies, and directives.

Table of Contents

  1. Why this is important
  2. About the Canada Economic Development for Quebec Regions (CEDQ)
  3. Core Control Audit Objective and Scope
  4. Conformance with Professional Standards
  5. Audit Findings and Conclusion
  6. Recommendations
  7. Management Response
  8. Appendix A: Policies and Directives Tested

Why this is important

Canadians expect the federal government to be well managed and to be accountable for the prudent stewardship of public funds, the safeguarding of public assets, and the effective, efficient and economical use of public resources. They also expect reliable and transparent reporting on how the government spends public funds to achieve results for Canadians.

The Financial Administration Act designates deputy heads as accounting officers for their department or agency. As accounting officers, deputy heads are accountable for ensuring that resources are organized to deliver departmental objectives in compliance with government policy and procedures; ensuring that there are effective systems of internal control; signing departmental accounts; and performing other specific duties assigned by law or regulation to the administration of their department or agency.

Core control audits are important as they provide deputy heads with assurance regarding the effectiveness of core controls over financial management in their respective organizations. By doing so, core control audits inform deputy heads of their organizations’ level of compliance with key requirements contained in selected financial legislation, policies and directives.

About the Canada Economic Development for Quebec Regions (CEDQ)

The objective of CEDQ is to promote the long-term economic development of the regions of Quebec by giving special attention to those where slow economic growth is prevalent or opportunities for productive employment are inadequate. In carrying out its objective, CEDQ also promotes cooperation and complementarity with the Quebec provincial government and communities in Quebec.

CEDQ works towards ensuring that Quebec regions have a competitive and diversified economy. CEDQ delivers six program activities in support of its object. In 2011–12, CEDQ had planned spending of approximately $298.9 million and planned human resources of 399 FTEs [full-time equivalents].

Core Control Audit Objective and Scope

The objective of this audit was to ensure that core controls over financial managementFootnote1 within CEDQ result in compliance with key requirements contained in the selected financial legislation, policies, and directives.

The scope of this audit included financial transactions, records, and processes conducted by CEDQ. Transactions were selected from fiscal year 2011-12. The audit examined a sample of transactions for each of the selected policies and directives. The Appendix A provides a complete list of policies and directives included in the scope of the audit and the overall compliance in the areas tested.

Conformance with Professional Standards

This audit was conducted in accordance with the Internal Auditing Standards for the Government of Canada based on the Institute of Internal Auditors' International Standards for the Professional Practice of Internal Auditing. A practice inspection has not been conducted; however one is planned for 2013-14.

Anthea English, CA
Assistant Comptroller General
Internal Audit Sector, Office of the Comptroller General

Audit Findings and Conclusion

Testing of core controls within CEDQ revealed full or partial compliance with the key requirements contained in 7 of the 13 policies, directives and corresponding legislation included in the scope. CEDQ was not in compliance with the remaining 6 policies and directives tested.

Weaknesses were identified in the administration of the acquisition card program. Half of the cardholders had not acknowledged their responsibilities in writing. It was also noted that the documentation on file was sometimes insufficient to support contracting decisions. For government travel and hospitality expenses supporting justification was not always documented. For leave, the approval was not always dated or given prior to the leave being taken. Some performance pay transactions were not based on objectives approved prior to the start of the performance period.

Weaknesses were also identified in expenditure initiation, where the funds commitment was not always certified by someone with the proper delegated authority and the expense not recorded at the value expected to be incurred. For account verification, proof of execution was not always performed on a timely basis and not always properly supported.

Recommendations

The Deputy Minister of the Economic Development Agency of Canada for the Regions of Quebec should:

  1. Ensure that the Directive on Acquisition Cards is respected.
  2. Ensure contracting activity is carried out in accordance with the Contracting Policy.
  3. Ensure that travel is conducted in accordance with related directives.
  4. Ensure that hospitality transactions are properly approved, tracked and monitored.
  5. Ensure that requests for leave with pay and special working arrangements are approved prior to the leave being taken.
  6. Ensure that performance agreements are signed by both the employee and the manager prior to the start of the performance period and are kept on file.
  7. Ensure that funds commitment availability is certified by someone with appropriate authority, and that expenses are recorded at the value expected to be incurred.
  8. Ensure that account verification is performed by someone with the delegated authority, that it is supported by complete documentation, is dated to verify the correctness of the payment, and that it is carried out on a timely basis.

Management Response

Management has accepted the audit findings and has developed an action plan to address the recommendations. It is expected that the management action plan will be fully implemented by April 2014.

The results of the audit and the Management Action Plan have been discussed with the Deputy Minister of the Canada Economic Development for Quebec Regions and with the Small Departments Audit Committee. The Office of the Comptroller General will follow-up on the Management Action Plan until all findings are resolved.

Appendix A: Policies and Directives Tested

Policies and Directives Tested

Compliance

 
Directive on Delegation of Financial Authorities for Disbursements
Met
 
Directive on Financial Management Governance
Met
 
Directive on Acquisition Cards
Not Met
 
Directive on Accountable Advances
Met
 
Contracting Policy
Partially Met
 
National Joint Council Travel Directive and the Directive on Travel Cards and Travellers Cheques
Not Met
 
Hospitality Policy / Directive on the Management of Expenditures on Travel, Hospitality and Conferences
Not Met
 
Directive on Leave and Special Working Arrangements
Partially Met
 
Casual Employees and the Policy on the Management of Executives
Partially Met
 
Directive on Financial Management of Pay Administration
Not Met
 
Directive on Transfer Payments
Partially Met
 
Directive on Expenditure Initiation and Commitment ControlFootnote2
Not Met
 
Directive on Account VerificationFootnote3
Not Met
 

Legend of Compliance ThresholdsFootnote4

 
Met
Greater than or equal to 98% compliance.
 
Partially met
Greater than or equal to 80% and less than 98% compliance.
 
Not met
Less than 80% compliance.
 
Footnote 1

See Appendix A for a complete list of policies and directives included in the scope of this audit.

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Footnote 2

Includes Financial Administration Act, Section 32.

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Footnote 3

Includes Financial Administration Act, Sections 33 and 34.

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Footnote 4

Compliance thresholds for the transactions tested.

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