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Table of Contents

Audit report

Audit of the Proactive Disclosure Process
Project # 09/10 01-02

Prepared by
the Audit and Evaluation Directorate

August 2010

Table of Contents

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1.0 Summary

1.1 Audit Objective

The objective of the audit was to determine whether the existing management framework enables the Canadian Space Agency (CSA) to meet government requirements for the proactive disclosure of information related to finance and human resources.

1.2 Audit Opinion

In our opinion, the existing management framework for the proactive disclosure is well controlled.

1.3 Statement of Assurance

As Chief Audit Executive, I am of the opinion that sufficient and appropriate audit procedures have been conducted and evidence gathered to support the opinion contained in this report. This opinion is based on a comparison of the conditions as they existed at the time of the audit against previously established audit criteria approved by management. The opinion is applicable only to the entity examined.

1.4 Summary of Recommendations

Our audit demonstrated that the CSA has established a management framework which enables the organization to meet government requirements for proactive disclosure. A process is in place for each disclosure item and the CSA complies with the directives of the Treasury Board Secretariat (TBS) in this regard.

We found that detailed instructions and procedures have been developed to guide employees through the disclosure process. In addition, the identification of the transactions to be published, established using financial and human resources systems, provides further assurance of the accuracy of the information disclosed. Furthermore, data entry using software developed internally specifically for this task, facilitates the process and ensures its uniformity.

In addition, further to our review, we are recommending a few actions which would improve the existing management framework:

  • Update the available documentation on roles and responsibilities for the disclosure of grants and contributions;

  • Document tasks carried out for the disclosure of grants and contributions;

  • For each disclosure item, include a data verification process following quarterly publication;

  • Review disclosure procedures related to contracts so as to ensure that all contracts over $10,000 are published.

Signature of the Chief Audit Executive

 

_________________________________________

Member of the Audit Team

Dany Fortin

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2.0 Audit Report

2.1 Background

The Government of Canada has implemented a series of measures to strengthen public sector management by enhancing transparency and oversight of public resources in the federal government.

One of these measures includes the proactive disclosure of financial- and human resources-related information by departments and agencies. When this information is readily available on departmental web sites, Canadians and Parliament ensures that Government and public sector officials are held accountable.

To this end, the government announced the mandatory publication on the Web sites of departments and agencies of:

  • information concerning travel and hospitality expenses for selected government officials

  • contracts entered into by the Government of Canada for amounts over $10,000, with only limited exceptions such as national security

  • the reclassification of positions, and

  • the awarding of grants and contributions over $25,000.

These measures were introduced between 2003 and 2005.

This audit engagement is part of the 2009-2010 annual audit plan approved by the Audit Committee on the basis of the assessment of risks at the CSA. The engagement was conducted during the fourth quarter of the 2009-2010 fiscal year.

2.2 Audit Objectives, Scope and Approach

The objective of the audit engagement was to determine whether the existing management framework enables the CSA to comply with government requirements related to the proactive disclosure of finance and human resources information.

The engagement dealt specifically with the CSA’s proactive disclosure process. Transactions subject to proactive disclosure from April 1 to December 31, 2009, were included in the scope of the engagement. The audit involved a variety of audit procedures, including interviews with employees, reviews and document analysis.

The audit criteria were established on the basis of best management practices and the following guidelines and guidance documents issued by the TBS:

  • Guidelines on the Proactive Disclosure of Contracts.

  • Guidance Document: Proactive Disclosure of Travel and Hospitality Expenses.

  • Guidance Document: Proactive Disclosure of Grants and Contributions over $25,000.

  • Guidance Document: Disclosure of Position Reclassifications.

2.3 Findings, Recommendations and Management Response

2.3.1 A management framework for proactive disclosure is in place

In order to ensure compliance with TBS requirements related to proactive disclosure, the CSA must integrate into its environment a management framework to guide employees, in which we expected to find the following components:

  • specific roles and responsibilities;

  • instructions, procedures and practices;

  • delays and schedules;

  • internal controls to ensure that the information presented is accurate and complete.

Processus de divulgation proactive

Proactive disclosure of information on finance and human resources at the CSA is broken down into four separate processes, which fall under the responsibility of four different work units:

  • The Accounting, Financial Reporting and Policies group is responsible, with the Office of the President, for the disclosure process for travel and hospitality expenses;

  • Contract disclosure is the responsibility of the Procurement and Contract Administration group;

  • The Classification group is responsible for entering data related to reclassification;

  • The disclosure of grants and contributions is carried out by a number of sectors, each of which is responsible for disclosing its own agreements.

The Access to Information and Privacy Coordinator reviews some information in order to ensure compliance with policies. The Communications group ensures the grammatical quality of publications. Lastly, a software program has been developed internally by the Systems Development group to support the process.

An overview of the proactive disclosure process in the work units is shown below.

Proactive disclosure process diagram

Roles and responsibilities

Audit objective:
A management framework for proactive disclosure is in place
Findings
Criterion
Condition
Cause
Effect
Roles and responsibilities are clearly specified:
  • The managers in charge of the work units involved in proactive disclosure are responsible for the process. The employees under the direction are responsible for carrying out the tasks required in accordance with the existing disclosure process. The audit team met with these employees and reviewed the available documentation on proactive disclosure. We found that roles and responsibilities were well described when the process was implemented and that employees are well informed as to their respective roles.

  • Some individuals that we met during the audit mentioned the lack of a person responsible for proactive disclosure as a whole. Someone had been identified in the past to coordinate and supervise implementation of the process, but that person left the CSA and was not replaced. This situation could be problematic when a question is raised or there is an initiative to take charge of.. However, since the disclosure process is now well established and effective, we consider that the sharing of responsibility among the managers, as we see it today, is appropriate for meeting the objectives of proactive disclosure. This situation implies that each work unit is a specialist in its own area of activity and answers any questions raised.

  • The disclosure process for grants and contributions is different, in that it requires the participation of a number of sectors. We observed that the available documentation on the various individuals responsible was not up to date. It was difficult for the audit team to identify the individuals involved in this disclosure process.

Lack of an individual responsible for coordinating, supervising and updating documentation on the grants and contributions disclosure process.
It is difficult to identify the individuals responsible for the disclosure of grants and contributions.
Recommendation
1- Update the available documentation on roles and responsibilities for the disclosure of Grants and Contributions.
Responsibility Identified
Organization
Function
Centre of Expertise on Grants and Contributions
Chief, Centre of Expertise on Grants and Contributions
Management Response
The Centre of Expertise on Grants and Contributions agrees with recommendation.
Management Action Plan
Details of the action plan
The documentation on roles and responsibilities for the disclosure of grants and contributions will be updated.
Timetable
March 2011

Instructions, procedures and practices

Audit objective:
A management framework for proactive disclosure is in place
Findings
Criterion
Condition
Cause
Effect
Instructions, procedures and practices have been established.
  • We found that highly detailed instructions, procedures and practices related to proactive disclosure had been developed by most of the work units. Most operations have been computerized. The systems development group has been involved in developing software for the quarterly assembly of the data to be published. The work of the individuals involved in the process consists mainly in extracting data from the financial and human resources systems, identifying the data to be published and entering them in the proactive disclosure software.

  • We found that the documentation on the instructions and procedures to follow for the disclosure of grants and contributions could be improved. Procedures do exist and they are known to the people doing the work, but they are not always documented.

Documentation has not been created for instructions and specific tasks to be carried out for the disclosure of grants and contributions.
There is a risk that knowledge related to the tasks to be carried out to complete the proactive disclosure process for grants and contributions will not be transferred properly when an employee leaves the CSA or when there is a change in the assignment of responsibilities.
Recommendation
2- Document tasks related to the disclosure of grants and contributions and ensure that the process is uniform among the various CSA’s sectors.
Responsibility Identified
Organization
Function
Centre of Expertise on Grants and Contributions
Chief, Centre of Expertise on Grants and Contributions
Management Response
The Centre of Expertise on Grants and Contributions agrees with the recommendation.
Management Action Plan
Details of the Action Plan
Detailed procedures will be developed to document the tasks carried out for the disclosure of grants and contributions in order to make the process uniform among the various CSA’s sectors.
Timetable
March 2011

Delays and schedules

Audit objective:
A management framework for proactive disclosure is in place
Findings
Criterion
Condition
Cause
Effect
Delays and schedules have been established.
We found that delays and schedules had been established internally for the timely publication of information. The schedules are quarterly and the publication delay is 30 days after the end of each quarter for contracts, travel and hospitality expenses and reclassifications and 60 days for Grants and Contributions.
N/A
N/A
Recommendation
Responsibility Identified
Organization
Function
N/A
N/A
Management Response
N/A
Management Action Plan
Details of Action Plan
N/A
Timetable

Internal Controls

Audit objective:
A management framework for proactive disclosure is in place
Findings
Criterion
Condition
Cause
Effect
Internal controls have been implemented to ensure that the information presented is accurate and complete.

The CSA has established controls to allow for compliance with TBS guidelines.

We identified the following controls:

  • Uniformity in data entry using internally developed software;

  • Identification of transactions to be published using the finance and human resources systems;

  • Automatic reminder system for schedules and steps to be completed;

  • Review of content related to privacy and protected information;

  • Approval process for the publication of grants and contributions;

  • Review of grammatical quality prior to publication of grants and contributions;

  • Separation of duties for the disclosure of travel and hospitality expenses.

However, we observed a situation where a data transfer error prevented the complete publication of information. The CSA’s Web site posted an error message when certain information was consulted on line. This was observed by the audit team a few weeks after the publication date. This situation demonstrates the lack of regular control to detect deficiencies once quarterly publication has been completed.

Procedures do not include a systematic review of the Web site to make sure that requirements are met after each quarterly publication and that no problems have been detected.
It is possible that problem might not be detected in time and that this would cause delays in the publication of information.
Recommendation
3- The processes for each disclosure item should include a procedure for verifying data after the quarterly publication.
Responsibility Identified
Organization
Function
  • Centre of Expertise on Grants and Contributions
  • Finance, Accounting, Reporting and Policy
  • Human Resources, Classification
  • Finance, Procurement and Contract Administration
  • Chief, Centre of Expertise on Grants and Contributions
  • Manager, Accounting, Financial Reporting and Policies
  • Manager, Classification, Organization and Employment Equity
  • Manager, Procurement and Contract Administration
Management Response
The work units responsible for disclosure agreed with the recommendation.
Management Action Plan
Details of the Action Plan
Centre of Expertise on Grants and Contributions :
A procedure will be developed to verify data following the quarterly publication.
Accounting, Financial Reporting and Policies :
Our procedure will be updated and the validation will be completed for the next disclosure requested for October 1st. The validation will be completed the day following publication.
Classification, Organization and Employment Equity:
A procedure will be developed to verify the data one week after the information has been published on the Web site. The verification will be completed by the Assistant, Classification, Employment equity and Staff Relations. This procedure will be added to the process already in place regarding the reclassification disclosure.
Procurement and Contract Administration:
One week after the disclosure of contracts over $10 000 on the Web site, data verification will be completed by the Assistant, Procurement and Contract Administration. This procedure will be added to the process already in place regarding the contract disclosure.
Timetable
March 2011
October 2010
Immediate
Immediate

2.3.2 The existing proactive disclosure process enables the CSA to meet TBS requirements

It is important that the CSA meet government proactive disclosure requirements so as to maintain an image of integrity and good governance. In this regard, it is expected that:

  • information is disclosed at the time it is required;

  • the presentation format meets requirements;

  • the information presented is complete.

We selected a sample of transactions for each disclosure item and compared it with the information published on the CSA’s Web site during the 2009-2010 fiscal year. We found that the existing process enables the CSA to meet all requirements related to proactive disclosure.

This review demonstrated that the existing management framework is effective.

Disclosure of information at the time required

Audit objective:
The existing proactive disclosure process enables the CSA to meet TBS requirements
Findings
Criterion
Condition
Cause
Effect
Compliance with guidelines and guidance documents: expenses are disclosed at the time required.
  • Requirements related to proactive disclosure include a very specific schedule with publication dates that must be met. The information is to be posted on the CSA’s Web site 30 days after the end of the targeted reporting period for contracts, travel and hospitality expenses and reclassifications and 60 days for Grants and Contributions.

  • We found that delays and schedules were met for the publication of information related to proactive disclosure. In order to ensure compliance, a number of computerized reminders have been integrated into the process, using the disclosure software.

N/A
N/A
Recommendation
S/O
Responsibility Identified
Organization
Function
N/A
N/A
Management Response
N/A
Management Action Plan
Details of Action Plan
N/A
Timetable

Presentation Format

The CSA must use a presentation format which meets the requirements related to proactive disclosure for each disclosure item.

The following is an overview of the required presentation format:

Travel and hospitality expenses
Contracts of over $10,000
Travel: Purpose of trip, date, destination, airfare, other transportation expenses, accommodation expenses, meals and incidentals , other expenses, total amount

Hospitality: description of hospitality, date, number of persons, location, total amount.

Name of supplier, reference number, contract date, specifications, contract duration/delivery date, contract value, comments
Reclassifications
Grants and contributions of over $25,000
Organizational component, position number, position title, previous classification, classification of reclassified position, job number, reasons for reclassification.
Name of recipient, location, date, value, type, purpose, observations, if any.
Audit objective:
The existing proactive disclosure process enables the CSA to meet TBS requirements
Findings
Criterion
Condition
Cause
Effect
The presentation format meets requirements.
Following a review of the information published on the CSA’s Web site, we found that the information is published in the required format for every disclosure item.
N/A
N/A
Recommendation
N/A
Responsibility Identified
Organization
Function
N/A
N/A
Management Response
N/A
Management Action Plan
Details of Action Plan
N/A
Timetable

The information presented is complete

The TBS defines the information which must be disclosed. With only a few exceptions, for security reasons, all information must be published. In order to determine whether the information presented is complete, we selected a sample of transactions to be published from among the four disclosure items. We then conducted a comparative analysis with the information posted on the CSA’s Web site. All the transactions selected were among the transactions for the first three quarters of 2009-2010. The audit of contract disclosure required a review of additional transactions, some of which were drawn from the fourth quarter of 2009-2010. The size of the sample was established based on the auditor’s judgment and was as follows:

Sample and error rate found
Category Total number of transactions for the period audited Number of transactions audited Percentage of error detected (%)
Contracts over $10,000

788

628

1.5%

Position reclassifications

20

20

0%

Grants and contributions over $25,000

23

23

0%

President’s travel and hospitality expenses

56

30

0%

 

Audit objective:
The existing proactive disclosure process enables the CSA to meet TBS requirements
Findings
Criterion
Condition
Cause
Effect
The information presented is complete.
  • We found that the information presented was complete. Almost all the audited transactions were published as required by TBS guidelines and guidance documents on proactive disclosure.

  • We found that some transactions related to contracts had not been published. In all, 10 transactions out of a total of 628 had not been published. This is about 1.5% of all transactions audited.

Occasionally, some contracts are entered in the SAP system after the agreement has begun and the proactive disclosure process has been completed. They are thus not entered when the disclosure report is generated.
Failure to publish a contract could potentially cause people to question the accuracy of the CSA’s proactive disclosure process.
Recommendation
4- Review the disclosure process for contracts so as to make sure that all contracts over $10,000 are published.
Responsibility Identified
Organization
Function
Finance, Procurement and Contract Administration
Manager, Procurement and Contract Administration
Management Response
The Finance, Procurement and Contract Administration Directorate agrees with the recommendation.
Management Action Plan
Details of Action Plan

The disclosure process for contracts will be reviewed to make sure that all contracts over $10,000 are published.

Specifically:

  • The report will be verified by contract officers prior to being officially posted.

  • We will now wait 2 weeks before the release date to generate the SAP report. This gives us the time to enter PWGSC contracts which we usually receive a few days after their actual issue date.

  • At the start of each quarter, we will revalidate the previous quarter to make sure that no contract which should have been included in SAP has been entered after the deadline.

  • When corrections are required, we will post the revised version for the quarter and indicate in the comments that it has been revised.

Timetable
Immediate