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Table of Contents

Annual Report March 31, 2006

FOLLOW-UP TO MANAGEMENT ACTION PLANS

Prepared by the
Audit, Evaluation and Review Directorate

March 2006

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IMPLEMENTATION SUMMARY

This follow-up report on the implementation of management action plans concludes the internal audit process and program evaluation, and outlines the measures taken by the various responsible entities in response to our findings and recommendations. According to the follow-up process in effect, management action plans are to be reviewed annually to determine the extent of implementation, which is then to be reported to the Audit and Evaluation Committee until the plans are fully implemented.

This annual report contains the follow-up findings as at March 31, 2006, for twelve audit projects and two evaluation projects, for which management action plans and reports were submitted to, and approved by, the Audit and Evaluation Committee.

We believe this report clearly shows that management is diligently implementing the recommendations that were drawn up. We are generally satisfied that the responsible entities are implementing the components of their action plans to which they committed themselves.

We would, however, like to underline the importance of implementing program performance measurement frameworks, providing the Agency with corporate financial systems that meet the expectations of managers and senior management and ensuring the quality of financial information.

The following pages describe in greater detail how the action plan for each audit and evaluation project has progressed.

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Audit Project: 00/01 01-04

INFORMATION MANAGEMENT

Audit Project Objective

The audit project objective was to provide management with assurances that the Information Management Division had an appropriate management framework to meet the requirements of the central agencies and that financial and operational management controls had been applied with sufficient rigour.

Sound records management is essential for ensuring that the information in records can be accessed and records, including records with archival or historical value, are protected.

Recommendations

In November 2001, we reported that the Information Management (IM) Division had a manager and employees who were competent and professional and had the necessary expertise to tackle numerous challenges in the IM field. We believe that the IM management framework fulfilled expectations very well, but nonetheless required some improvements. During our review, we found that management was already taking action to solve some of the problems raised in the audit report.

Implementation Status

During the year, management satisfactorily completed the implementation of the two items that were in abeyance on March 31, 2005.

The drafting of an IM management framework, one of the items in abeyance, has been completed and the framework is to be presented to the Chief Information Officer by March 31, 2006. This framework provides CSA staff with guidelines to ensure that everyone is aware of the importance of managing the CSA's information resources.

The other item in abeyance was the development of a directory of essential documents. To date, much effort has gone in to the development of a directory of essential documents. An organization and procedures manual has been drafted and forms for describing, transferring and planning the resumption of essential activities have been developed. The project is now at the stage where essential documents are being identified by means of interviews with Directors and Directors General.

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Audit Project: 00/01 01-05

SECURITY AND FACILITIES

Audit Project Objective

The audit project objective was to provide management with assurances that the Information Management Division had an appropriate management framework to meet the requirements of the central agencies and that financial and operational management controls had been applied with sufficient rigour.

Sound records management is essential for ensuring that the information in records can be accessed and records, including records with archival or historical value, are protected.

Recommendations

In November 2001, we reported that the Information Management (IM) Division had a manager and employees who were competent and professional and had the necessary expertise to tackle numerous challenges in the IM field. We believe that the IM management framework fulfilled expectations very well, but nonetheless required some improvements. During our review, we found that management was already taking action to solve some of the problems raised in the audit report.

Implementation Status

During the year, management satisfactorily completed the implementation of the two items that were in abeyance on March 31, 2005.

In previous annual reports we reported that management was fully committed to developing and implementing a departmental security plan in accordance with the Government Security Policy. Policies and procedures are being drafted in an orderly and rigorous fashion. Given the scope of the task, the original schedule has been revised and it is now anticipated that the final security policy will be published in September 2007. In 2005-2006 four new policies were added to the two that had been approved previously. Three other policies are to be drafted and tabled for approval in 2006-2007, and the two remaining ones in 2007-2008. The information technology security policy and the business continuity policy are priorities for 2006-2007. When drafting is completed, the Agency will have eleven security policies.

As regards to facilities management, most of the items for ensuring the delivery of real property management services that were in abeyance were implemented in 2005-2006. Items implemented include the cooler maintenance contract, the drafting of maintenance procedures and the staffing of day labourer and maintenance technician positions.

Given the activities that have been completed, are under way and planned, we consider that the action plan has been fully implemented.

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Audit Project: 01/02 01-01

AUDIT OF THE EXERCISE OF FINANCIAL AUTHORITY

Audit Project Objective

The audit project objective was to determine the extent to which the CSA was meeting its financial management responsibilities, especially with regard to monitoring requirements set out in sections 32, 33 and 34 of the Financial Administration Act (FAA) and other Treasury Board requirements for delegating financial authority, committing expenditures, certifying contract performance and verifying accounts for payment purposes.

Recommendations

In November 2002, we reported that financial authority was properly exercised overall. Expenditures were committed and certified in compliance with sections 32 and 34 of the FAA and independent financial officers verified accounts for payment purposes in accordance with section 33.

However, several recommendations were made to consolidate the control framework and improve the effectiveness and efficiency of operations.

Implementation Status

Action plan components that were under way and completed to varying degrees on March 31, 2005 are still in progress.

As yet, there has been no satisfactory follow-up by management on the recommendation to define (explain and describe) the nature and scope of the financial authorities invested in officers with delegated authority.

Implementation of audit sampling of changes to payroll files, to comply with section 33 of the FAA, is still planned but is yet to be carried out.

There has been no follow-up respecting the assessment and the development of a new purchase order for the procurement of services, although this was to have been taken into account during the migration to SAP 4.7

The automatic payment of interest as of the due date, in cases where the Agency is late in paying its suppliers, has not yet been implemented.

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Audit Project: 01/02 01-04

OPENING BALANCES

Audit Project Objective

For the purposes of implementing the Financial Information System (FIS), the establishment of opening balances on April 1, 2001 was the starting point for recording and accounting in accordance with the new accounting standards. The objective of this audit project was to ensure that opening balances had been correctly established and accounted for in compliance with the new accounting standards.

Recommendations

It was pointed out in the audit report submitted in November 2002 that the opening balances as at April 1, 2001, as reviewed and corrected with the participation of the Receiver General and the Treasury Board Secretariat, complied with requirements. However, we submitted recommendations to the Corporate Management Directorate in an attempt to ensure the accuracy of audit balances throughout the year by validating the balances of certain accounts, setting up periodic account analysis procedures and making effective policies available to staff.

Implementation Status

The Corporate Management Directorate has followed up on nearly all of the items in its action plan.

However, the value of the Agency's inventory has not yet been assessed. According to accounting principles, this exercise must be conducted to evaluate the relative size of the inventory, and, if necessary, to record its value in the financial statements. Revision of the policy on the Accounting Treatment of Tangible Capital Assets to add appropriate directives respecting the identification and accumulation of costs that can be capitalized has not yet been carried out.

In an attempt to ensure that accounting record balances are complete and accurate, management has followed up on our recommendations by introducing practices based on procedures for obtaining confirmation from sector financial officers. We must say, however, that, in spite of these initiatives, we encourage management to continue its efforts to improve periodic account analysis procedures by standardizing analysis formats, for example, and extending them to other general ledger accounts that require this type of monitoring. Management must also ensure that staff are fully cognizant of the concept of account analysis and of the fact that these procedures are essential to the production of audited financial statements.

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Audit Project: 01/02 01-05

MANAGEMENT OF TRAVEL EXPENSES

Audit Project Objective

The Audit Project objective was to assess the extent to which the management framework for travel expenses helped to carry out the CSA's program and objectives effectively, efficiently and economically while complying with Treasury Board policies and guidelines.

Recommendations

Travel is generally carried out economically and reasonably so as to reduce the financial impact on the Agency. We also reported that there were enough breaches of the rules to conclude that the travel directives were misunderstood both by employees travelling on official business and by managers approving travel and authorizing requests for travel allowances. Several recommendations were put forward to raise staff awareness of the need to comply with policies and procedures and adopt effective, efficient practices.

Implementation Status

The Corporate Management Directorate has assumed responsibility for the action plan, although many of the recommendations were intended for all Agency employees. We had reported in the previous annual report that several initiatives had been implemented to inform employees and increase their awareness about good practices.

Audit sampling procedures and the resulting non-compliance reports help to identify weaknesses and establish appropriate corrective measures to keep error rates at acceptable levels.

As a result of the government Travel Directive issued in October 2002 and the new government travel service, the Agency's travel policies and procedures are obsolete. Management has not yet followed through on its undertaking to carry out an in-depth revision of all of the Agency's travel policies.

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Audit Project: 01/02 01-06

FINANCIAL MANAGEMENT INFORMATION

Audit Project Objective

The audit project objective was to assess the degree to which employees have quality information provided in sufficient amounts and on a timely basis to help them carry out their financial management responsibilities, and to assess whether this information is obtained in efficient ways.

Recommendations

The audit report of December 2003 set out recommendations for improving the Agency's financial management capability. We reported that the Corporate Management Directorate had to take action in several ways to give managers at all levels of management more support to help them to carry out their financial management responsibilities.

Implementation Status

The Corporate Management Directorate has implemented several components of the action plan to achieve stricter management of the accounting system and develop a coding system that complies with accounting requirements and is suited to Agency operations. There was a thorough review of the accounting system and it can now be used to identify and classify operations based on their relationship with strategic results. It will also help to strengthen the financial management of projects. What remains to be done is a review of the policy on Financial Coding and the policy on the Accounting Treatment of Tangible Capital Assets.

Since 2004-2005, considerable effort has gone into reviewing parliamentary appropriations to ensure that they correspond to the type of operations for which they are intended. This review was completed during the 2005-2006 fiscal year. Management plans to complete the initiatives undertaken to improve employee understanding of parliamentary appropriations by adopting a policy that addresses this issue.

The Corporate Management Directorate took advantage of the development of the new version (SAP 4.7) of the corporate finance system to advertise the system, at the same time introducing corrective measures to meet financial management requirements and managers' needs.

However, since the Corporate Management Directorate has not yet established standards for reports and content, the corporate finance system cannot satisfy all of the needs of managers and senior management. Some employees continue to compensate for the fact that the system does not contain certain financial data, such as forecasts, by using complementary systems, while others simply do not have access to adequate financial management tools.

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Audit Project: 02/03 01-03

ACQUISITION CARD PROGRAM

Audit Project Objective

The audit project objective was to ensure that the Agency carried out its acquisition card management responsibilities properly and effectively. The audit also assessed the appropriateness of the management framework as well as compliance with related Treasury Board Secretariat (TBS) requirements.

Recommendations

In January 2003, we reported that acquisition cards were an appropriate tool and suited to modern management practices. They can also considerably lighten the workload in the Contracts Division, with nearly 5,500 transactions being made by acquisition cardholders per year, worth an average of $415. We also mentioned that practices had changed since acquisition cards were introduced in 1999 and that some practices should be reviewed to tighten up the management framework. We also felt that special attention should be devoted to the administrative aspect of transactions and that a reminder should be sent to key staff members (managers and cardholders) to make them aware of their responsibilities.

Implementation Status

Implementation of the action plan has not progressed since last year. The implementation status is the same as last year. The following items are in abeyance.

  • The Acquisition Card policy has been fully reviewed and has been, for the past years, at the stage of revision and translation. (Due date: September 2003).

  • The feasibility study to determine the cost-effectiveness of using the acquisition card to make payments was carried out two years ago. However, owing to a lack of resources, analysis of the data from the study has been delayed (Due date: March 2004).

  • Implementation of the recommendation to organize awareness sessions for acquisition card users and their managers has again been delayed on the pretext that the possible inclusion in SAP 4.7 of a module on acquisition cards will have a major impact on procedures and administrative policies (Due date: December 2003).

  • Inventory control procedures to ensure that acquisition card purchases of non-consumable goods worth over $1,000 or of attractive material are recorded in the inventory have not yet been reviewed. As with the previous item, management is waiting for the introduction of the acquisition card module in SAP 4.7 for controls to be put in place in this respect.

It should be noted that the date on which the acquisition card module will be available in SAP 4.7, is not known yet, as the date is to be determined in accordance with corporate priorities. According to information obtained, such a module may be available sometime in 2006-2007, 2007-2008 or even later. We consider that management should take alternative action to eliminate the gaps that were discovered in January 2003 and still exist today.

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Audit Project: 02/03 01-04

OCCUPATIONAL HEALTH AND SAFETY PROGRAM

Audit Project Objective

The audit project objective was to determine the extent of implementation of the action plan submitted in response to the Health Canada recommendations issued in the Health Canada report of March 1999 on the Occupational Health and Safety Program. The report submitted by Health Canada in March 1999 put forward 36 recommendations.

Recommendations

In April 2003, we reported that considerable effort had been made since the action plan had been submitted to the Executive Committee in July 2001. Moreover, some actions set out in the plan involved the Occupational Health and Safety Policy Committee (OHSPC), whereas the Committee was not yet active in the Agency at the time of the audit.

Furthermore, some actions set out in the plan involved the Human Resources Directorate, the Local Occupational Health and Safety Committee (LOHSC) and the OHSPC. However, these entities were not in agreement on the identified actions or methods of implementing them.

Implementation Status

Last year, the OHSPC, the LOHSC and the Human Resources Directorate agreed on what actions to take to ensure full implementation of the items in abeyance as at March 31, 2005.

We currently consider that the three items in abeyance last year have been satisfactorily implemented. Following discussions, a decision was made to initiate the following actions

  • Leave work descriptions as they are and add an OHS-related parameter to managers' performance evaluations in sectors at risk.

  • Draft a short description of OHS-related performance evaluation statements.

We consider that the third action, which was in response to Health Canada's recommendation that management should communicate at least once a year with employees on the importance of OHS and on the CSA's commitment to OHS, has been fully implemented, given that the CSA has already taken the following three concrete steps in response to this recommendation.

  • Issuing an annual communiqué during OHS week in October.

  • Raising the awareness of LOHSC members and creating a communication working group within the LOHSC.

  • Putting an OHS item on the agenda of sectoral management meetings.

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Audit Project: 03/04 01-01

MANAGEMENT FRAMEWORK OF THE SPACE TECHNOLOGIES BRANCH

Audit Project Objective

The objective of this audit project was to evaluate the extent to which elements of the Space Technologies Branch's management framework concerning governance, operations and information systems allow the Branch to fulfill its mandate, carry out its operations effectively, efficiently and economically, while complying with requirements prescribed by acts, regulations and policies, and protect and account for the use of resources.

Recommendations

In a context in which the focus is on results, we believe it is important that significant steps be taken to strengthen the management framework of the Space Technologies Branch. These improvements concern fundamental elements of the Branch's management framework. Some measures will have to be implemented by the Branch itself, while others will fall to the appropriate corporate services sectors.

Implementation Status

Management has followed up on observations and recommendations intended to ensure that certification required under section 34 of the FAA is obtained in the proper fashion. At the same time, parliamentary appropriation requirements were reviewed to bring them into line with planned operations and expenditures. The chart of accounts was tailored to the activities and projects that require financial monitoring. Interdepartmental operations are now subject to appropriate accounting treatment and the roles and responsibilities of the parties will henceforth be framed by a proper agreement.

In 2006-2007, management plans to continue work on those parts of the action plan intended to ensure that staff are familiar with the link between their programs and the strategic outcomes sought by the Agency, that all of their programs include a performance measurement framework and that there are periodic reports on performance.

As far as program delivery is concerned, management intends to analyse program delivery methods and to consult TBS to tailor administrative mechanisms to operations. Any necessary adjustments will take effect in 2007-2008.

At the same time, the Corporate Management Directorate will have to undertake the development of a corporate time management system so that costs can be attributed to activities on the basis of the time actually spent by staff on those activities.

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Audit Project: 03/04 01-04

IMPLEMENTATION OF THE PROJECT APPROVAL AND MANAGEMENT FRAMEWORK

Audit Project Objective

The audit project objective was to ensure that the policies, procedures and practices (PPPs) of the Project Approval and Management Framework (PAMF) had been updated in response to observations and recommendations set out in the audits conducted in 2002 by the Audit, Evaluation and Review Directorate and the Office of the Auditor General of Canada. Another objective was to ensure that the PPPs were operational and systematically applied to all projects carried out at the Agency.

Recommendations

In March 2004, we reported that the review of the PAMF was in progress and encouraged the Project Management Office to continue its efforts by including new measures in its action plan to extend the policy to all projects carried out at the Agency. Other recommendations focussed on support for the implementation of the project management framework using standardized procedures and practices suited to requirements.

Implementation Status

To ensure more rigorous, uniform management of projects, minimum requirements for documentation have been established with respect to project planning, implementation, monitoring and termination. Various tools have also been reviewed to make them more suitable for the projects conducted at the Agency, while other instruments have been developed to provide greater support for persons concerned.

A major review of PPPs has been carried out to reflect various changes made to components of the Project Approval and Management Framework. One of the most important changes was to distinguish between corporate policy and procedures and practices. Moreover, in order to account for all of these changes and facilitate access to supporting documents, the intranet site assigned to project management and risk management has been completely overhauled.

The review of the policy and practices has been completed in 2005-2006 and approved by the Executive Committee. To complete the PAMF review process, a draft document has been prepared for the Treasury Board Secretariat, advising it of the changes to the framework that was approved in 2000 and requesting its approval.

In light of the activities that have either taken place, are under way and planned, we believe that the management action plan has been fully implemented.

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Audit Project: 04/05 01-01

AUDIT- CANADA/ESA COOPERATION AGREEMENT

Audit Project Objective

The audit project objective was to ensure that the systems and procedures for all aspects of program management were effective, efficient and economical. We examined components of the Canada/ESA Cooperation Agreement in effect during fiscal year 2003-2004.

Recommendations

In November 2004 we reported that implementation of the audit report recommendations would allow the program manager to carry out his duties more effectively, especially with respect to compliance with program policies and conditions, decision-making and accountability. We recommended, among other things, that:

  • complete administrative records for each optional program be retained

  • a process for consultations with industry be put in place

  • ESA's accumulated appropriations be monitored

  • a mechanism for minimizing the risks of fluctuations in exchange rates be implemented

  • The Risk-Based Audit Framework (RBAF) and the Results-Based Management and Accountability Framework (RMAF) be implemented.

Implementation Status

Management initiated a number of measures related to administrative and financial practices, such as updating the evaluation criteria in the Program Approval Document (PAD), setting up a financial monitoring system for contributions granted to optional programs and more stringent monitoring of ESA's accumulated appropriations.

However, measures to implement the RBAF and the RMAF were not taken, although the due dates in the action plan were April and October 2005 respectively. In fact, at this time, management has not put in place a data gathering system to measure program results. With regard to the exchange rate fluctuation risk, management plans to include this component in the CSA's risk-management framework.

Much remains to be done before comprehensive administrative files for each of the optional programs are available. The electronic records management system (Livelink) will be used to achieve this goal.

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Audit Project: 04/05 01-03

MANAGEMENT FRAMEWORK, DAVID FLORIDA LABORATORY DIRECTORATE

Audit Project Objective

The audit project objective was to evaluate the extent to which governance, operations and information systems elements in the David Florida Laboratory (DFL) Directorate's management framework allow the DFL to fulfill its mandate, carry out operations effectively, efficiently, economically, while complying with requirements prescribed by acts, regulations and policies, and protect and account for the use of resources.

Recommendations

Our observations and recommendations to management focussed on improving financial information quality, demonstrating transparency and equity when levying external user fees and managing accounts receivable more rigorously.

Implementation Status

The David Florida Laboratory Directorate and the Corporate Management Directorate immediately set about implementing the action plan they had proposed. Most of the pending accounts receivable were collected, financial needs in terms of parliamentary appropriations were reviewed and brought into line with operations and interdepartmental operations are now subject to the prescribed accounting treatment.

A number of the action plan components that are being implemented are at various stages of implementation. Steps were taken to establish service production costs and the market value of services comparable to those offered by the DFL. Comparing practices with policies and procedures may, if necessary, result in a revision of the latter and staff involved in billing and collection of accounts receivable procedures may be reminded of their roles and responsibilities. We should also mention the initiation of a review of expenses recorded since April 1, 2001, the purpose of which is to retrace disbursements that were wrongly coded and to make the appropriate corrections to asset accounts.

Management has not yet started developing a capital expenditures investment plan, a priority for 2006-2007 in terms of the Management Accountability Framework (MAF). The Corporate Management Directorate also has to introduce periodic account analysis procedures to try to ensure the accuracy of the financial information entered in the Agency's accounting records, especially for revenues and accounts receivable.

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Evaluation Project: 02/03 02-01

MAJOR CROWN PROJECT: CANADIAN SPACE STATION PROGRAM (CSSP)

Evaluation Project Objective

The project objective was to provide management with an evaluation of the extent to which the forecast objectives of the Canadian Space Station Program had been achieved as well as a statement of CSSP results. We looked at the management framework to ensure that it was appropriate and met the requirements of the central agencies and that financial management and operational controls were implemented with sufficient rigour.

Recommendations

In April 2003, we reported that the CSSP had achieved several of the initially established objectives. We also mentioned that we believed that the existing management framework required some improvements. We made some recommendations with respect to project management, risk management, financial management, strategic planning and distribution of industrial regional benefits.

Implementation Status

By taking into account the following, all of the recommendations have now been implemented.

The upgrading of the SAP corporate financial system has been completed and should help to provide managers with the tools they need to adequately manage the financial aspects of their projects.

We consider that implementation of this recommendation is progressing and that, even if adjustments become necessary while using the project management module, management is able to comply with this recommendation.

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Evaluation Project: 04/05 02-02

EVALUATION - CANADA/ESA COOPERATION AGREEMENT

Evaluation Project Objective

The project objective was to provide management with an evaluation of the attainment of set objectives as well as a report on the results for the Canada/ESA Cooperation Agreement. We looked at the management framework to ensure it was adequate and met central agency requirements and that the financial and operational controls were being applied with sufficient rigour.

Recommendations

In November 2004, we reported that the Canada/ESA Cooperation Agreement had met a number of its initial objectives. We also said that, in our opinion, the existing management framework required improvement. We made recommendations regarding the program's political aspects, the achievement of objectives, the program and risk management framework, the promotion of information and the consultation process.

Implementation Status

We are dissatisfied with the implementation of the action plan. The approved timetables are not observed.

Measuring program performance will again be a problem in 2008-2009 when we conduct the summative evaluation because the result measurement systems have not yet been implemented two years after the development of the RMAF.

When this program was approved, funds were earmarked for program evaluation. Some of these funds should be used to put into place a performance measurement mechanism, being an intrinsic component of the evaluation.