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Table of Contents

Annual Report as at March 31, 2010

Management Action Plans Follow-Up for Internal Audit

prepared by the
Audit and Evaluation Directorate

April 2010

Table of Contents

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Implementation Summary

This follow-up report on the implementation of management action plans concludes the internal audit process and outlines the measures taken by the various entities concerned in response to our findings and recommendations. As part of the follow-up process in effect, management action plans are to be reviewed annually until they are fully implemented, and the extent of implementation is to be assessed and reported to the Departmental Audit Committee (DAC).

This annual report contains the follow-up findings as at March 31, 2010, for ten audit projects and for which reports and management action plans have been submitted to and approved by the DAC. The following charts give an overview of the implementation status of the management action plan elements.

Overview of the implementation status of the management action plan elements

The following pages set out in detail the progress of the action plans for each of the audit projects.

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Audit Project: 01/02 01-04

Opening Balances

Audit Project Objective

In the framework of Financial Information Strategy (FIS), the establishment of opening balances as of April 1, 2001, was the starting point for recording and accountability under the new accounting standards. The purpose of this project was to ensure that the opening balances had been correctly established and recorded in compliance with the new accounting conventions.

Pie chart: Opening Balances

Nature of 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 (TBS), complied with requirements. However, we submitted recommendations to the Finance Directorate to the effect that the accuracy of audit balances could be guaranteed 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 value of the CSA’s inventory has not been determined yet. Accounting principles require this to be done in order to evaluate the inventory in relative terms and include its value in the financial statements if appropriate.

Bar chart (Implementation status): Opening Balances

Management has informed us that determining the value of the inventory is part of its action plan for the preparation of the CSA’s audited financial statements. The Contracting Administration Division will help establish the CSA’s inventory.

Management intends to follow up on its action plan by December 31, 2010.

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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 system elements in the David Florida Laboratory (DFL) Directorate’s management framework allow the DFL to fulfil its mandate, carry out operations effectively, efficiently and economically while complying with requirements prescribed by acts, regulations and policies, and protect and account for the use of resources.

Nature of Recommendations

Pie chart: Management Framework, David Florida Laboratory Directorate

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

Implementation Status

The development of the Agency investment plan continued last fiscal year in cooperation with the TBS to ensure it meets the requirements of the Policy on Investment Planning – Assets and Acquired Services. The objective is to submit the CSA’s investment plan in March 2010 for Treasury Board approval.

DFL services provided for other Agency sectors must be accounted for under the relevant activities in terms of actual costs. The Finance Directorate has nearly finished establishing the billing rate following the update of actual costs. Bar chart (Implementation status): Management Framework, David Florida Laboratory Directorate

Practices related to invoicing and collecting accounts receivable are still being reviewed in keeping with policies and procedures, which should be revised. Also, staff concerned will be reminded of their roles and responsibilities.

An analysis is still under way concerning a review of accounted expenditures since 2001 to find payments with erroneous coding. The asset accounts are expected to be corrected taking into account the results of a physical inventory.

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Audit Project: 05/06 01-03

Management Framework, Space Operations Branch

Audit Project Objective

The objective of this audit project was to evaluate the extent to which elements of the Space Operations Branch’s management framework (excluding DFL) concerning governance, operations and information systems allow the Branch to fulfil 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.

Nature of Recommendations

Pie chart: Management Framework, Space Operations Branch

We reported in September 2007 that management needed to exercise more control over its expenditures and revenue collection, while some practices needed to be rethought to improve their efficiency and effectiveness. Even though the audit project was specifically concerned with the Space Operations Branch’s management framework, we reported that the Agency also needed a management framework more in line with TBS requirements, in particular as regards planning and program performance measurement.

Implementation Status

Although instructions to departments on how to prepare a Management, Resources and Results Structure (MRRS) and TBS recommendations regarding evaluation of the CSA’s (Management Accountability Framework (MAF) are clear, we still find that the Program Activity Architecture (PAA) programs and expected outcomes are, to a great extent, not up to the standard of the MRRS. The CSA is currently developing a new PAA that will be in line with a new long-term space plan, and it should not have any non-compliant elements, since it is being developed in keeping with TBS instructions. Development of the PAA is going well. It should be effective April 1, 2011.

Bar chart (Implementation status): Management Framework, Space Operations Branch

In keeping with the principle of results-based management, we recommended that management ensure that the performance of each program be subject to an official and regular review. This task has not been done yet, in spite of the commitment to take care of this matter as part of the financial planning cycle.

The CSA’s governance is currently being reviewed and will take this responsibility into account.

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Audit Project: 06/07 01-01

Management Framework, Space Sciences Branch

Audit Project Objective

The objective of this audit project was to evaluate the extent to which elements of the Space Sciences Branch's management framework concerning governance, operations and information systems allow the Branch to fulfil 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.

Nature of Recommendations

Pie chart: Management Framework, Space Sciences Branch

In February 2008, we were of the opinion that the Space Sciences Branch had a management framework which, generally speaking, enabled the organization’s objectives to be met.

We drew management’s attention to observations and recommendations intended to bolster and enhance the effectiveness and compliance of certain elements of its management framework: integrate the PAA components into its work environment, better manage universities’ claims, review performance and funding modes, and better identify expenditures for accounting purposes.

Implementation Status

Bar chart (Implementation status): Management Framework, Space Sciences Branch

The two pending elements in the action plan have been completed. Finance Directorate staff, in cooperation with TBS representatives, have agreed on a solution for the use of the right appropriations and accounting for expenditures made when the CSA pays postdoctoral scholarships as part of a grants and contributions program administered by the Natural Sciences and Engineering Research Council.

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Audit Project: 06/07 01-03

Project Management Processes and Practices

Audit Project Objective

The objective of this audit project was to assess to what extent CSA’s project management processes and practices (Phases 0 to E inclusive) enable it to make informed decisions as to the choice of projects/initiatives to be financed, to follow up appropriately, to implement the approved initiatives in line with the principles of effectiveness, efficiency and economy, to attain the planned results as set out in the main planning documents, to comply with all relevant policies, regulations and guidelines issued by CSA and the central agencies, and to report on resource use.

Nature of Recommendations

Pie chart: Project Management Processes and Practices

We reported in October 2007 that CSA had developed good project and risk management frameworks but did not make proper use of them in day-to-day management. We also observed that cost/benefit performance problems, missed deadlines and cost overruns were endemic in the projects conducted by the Agency. Our findings concerned the decision-making process, obtaining financial authority, information integrity, the Project Approval and Management Framework (PAMF), project planning, changes in project scope, cost estimates, technology maturity, project follow-up, risk management and performance evaluation.

Implementation Status

We recommended that a strategic and implementation plan be developed, priorities be established to reduce the number of projects under way and the project approval method be reviewed. Elements related to the development and implementation of the next long-term space plan and to CSA's ongoing governance review are still pending.

Bar chart (Implementation status): Project Management Processes and Practices

To clarify the roles of the team responsible for implementing the PAMF, management had made a commitment to review the team’s roles and responsibilities. This exercise is currently under way as part of the reorganization announced by the President in November 2009.

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Audit Project: 07/08 01-01

Travel, Conferences and Hospitality Expenses

Audit Project Objective

The overall objective of this audit project was to determine whether the management framework in place for travel, conference and hospitality expenses was satisfactory and in compliance with the Treasury Board Secretariat Travel Directive, the TBS and CSA Hospitality policies, and the Financial Administration Act (FAA).

Nature of Recommendations

Pie chart: Travel, Conferences and Hospitality Expenses

In March 2008, we reported that we were of the opinion that management had introduced a satisfactory control structure for travel, conference and hospitality expenses.

We drew management’s attention to observations and recommendations that were mainly intended to enhance the compliance of practices, policies and procedures, and the effectiveness, efficiency and internal control of certain elements of its management framework.

Among the elements management was asked to pay special attention to were proper financial coding of certain travel expenses, correct completion of the Travel Authority and Advance (TAA) and Travel Expense Claim forms, accurate disclosure of travel and hospitality expenses on the Agency's Web site, and the maximum acceptable error rate in account verification.

Implementation Status

Only one recommendation, regarding account verification, had still not been acted upon at the beginning of the year. Management has put measures in place to reduce the number of errors in travel and hospitality expenses.

Bar chart (Implementation status): Travel, Conferences and Hospitality Expenses

Quality control by sampling now enables the Agency to identify errors made by the sectors’ financial clerks. Recurring errors are recorded in a database and included in travel training to inform the clerks. One-on-one meetings are also organized. These detection controls have brought down the error rate and enable the Agency to compile information, thereby reducing errors on an ongoing basis. This measure completed the implementation of the action plan.

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Audit Project: 07/08 01-04

Staffing Activities and Transactions

Audit Project Objective

The objectives of this audit were to evaluate the extent to which the recommendations of the Public Service Commission (PSC) audit report of May 2006 had been implemented and to determine whether the management framework for staffing activities and transactions were consistent with the new Public Service Employment Act and with PSC policies, regulations and orders.

Nature of Recommendations

Pie chart: Staffing Activities and Transactions

In August 2008, we reported that although there was still some work that needed to be done, our view was that management had responded with due diligence to the recommendations in the PSC report.

We also drew management’s attention to the challenges in store for CSA with respect to its workload and succession planning. We indicated that measures would be required to manage the workload with a view to filling vacant positions within a reasonable time frame and to cope with the massive departures expected in a number of key groups over the coming years.

Implementation Status

Major progress has been made on the implementation of all the recommendations in the report. The Integrated HR Plan has been updated and has identified corporate HR priorities. Also, most of the performance measures identified in the Staffing Monitoring Framework have been implemented and the Departmental Staffing Accountability Report was drafted for 2009-2010.

Bar chart (Implementation status): Staffing Activities and Transactions

A number of tools have also been developed to help managers manage their staffing activities. A toolbox that includes reference documents is now available on the intranet site. An automated reminder is sent to managers two months before a staffing action, such as an assignment, acting appointment or term employment, is over and a decision is required. Finally, learning and professional development programs have been developed for succession purposes to find candidates for a number of positions, including HR officers, mission controllers and engineers.

To complete the implementation of the action plan, management will have to draft a strategic HR management plan, finalize the peer monitoring and control mechanism and complete the deadline tracking system. The new long-term space plan will provide guidance for the strategic HR management plan.

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Audit Project: 08/09 01-01

Sampling Plan Design and Operation

Audit Project Objective

The audit objective was to assess the design and operation of the monitoring system developed to identify high-risk operations for review and validation.

Pie chart: Sampling Plan Design and Operation

Nature of Recommendations

In October 2008, we reported that management had implemented a sampling plan that allowed the identification of high-risk operations for audit purposes.

We also made recommendations to management aimed at improving the effectiveness and cost-effectiveness of the design and operation of the sampling plan in order to make better use of resources.

Implementation Status

We recommended that, every year, the sampling plan be revised, the level of risk of operations categories be reviewed, periodic reports on identified errors be produced and a corrective and follow-up mechanism be implemented for staff of the various sectors.

Bar chart (Implementation status): Sampling Plan Design and Operation

Efforts focused on developing the Central Accounting Verification System (CAVS) so that it produces periodic reports to support the review of the sampling criteria and the level of risk of each operations category. Management intends to settle a few technical issues by June 30, 2010, with the help of IT staff so as to finish developing the CAVS. Pending, for reasons of prudence, most payment claims are still subject to account verification because the claims are all codified as high risk.

Until the time when the automated production of reports with the CAVS will be in effect, certain data on the number and nature of errors are compiled manually. These reports have enabled the Accounting Services to consolidate information, identify error rates by sector and inform the staff concerned. A more formal process will be implemented when the CAVS reports become available.

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Audit Project: 08/09 01-02

Business Continuity Planning

Audit Project Objective

The purpose of this audit was to evaluate the compliance of the Business Continuity Planning (BCP) Program, whose purpose is to maintain essential operations in the event of a disaster at the Canadian Space Agency (CSA).

Nature of Recommendations

Pie chart: Business Continuity Planning

In January 2009, we reported that management had implemented a governance framework and plans in keeping with the Policy on Government Security and Operational Security Standard on Business Continuity Planning.

However, we recommended that the implementation of the CSA BCP Program be completed.

Implementation Status

We recommended that the corporate policy be finalized, replacements for the corporate coordination cell be designated, training sessions be organized and business continuity plans related to essential services be finalized. Management had submitted an action plan according to which it intended to carry out some of the recommendations by March 31, 2010, and others by March 31, 2011.

Bar chart (Implementation status): Business Continuity Planning

Management still has not started implementing its action plan because efforts were redirected to the coordination of a business continuity plan in the event of pandemic influenza (H1N1 virus). In addition, in keeping with the new Policy on Government Security, the corporate policy will become a corporate directive.

Management informed us that it would start carrying out the recommendations as soon as possible to meet the deadline of March 31, 2011.

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Audit Project: OCG-01

Contracting and Monitoring Information Systems

Audit Project Objective

This audit was carried out in 2009 by the Office of the Comptroller General (OCG) as part of its Horizontal Audit Plan. The audit objectives were to provide reasonable assurances that:

  • Management receives relevant and reliable contracting information in support of informed decision making, risk management and disclosure, and
  • Effective governance structures are in place to review contracting trends and risks and take the necessary measures.

Nature of Recommendations

Pie chart: Contracting and Monitoring Information Systems

In May 2009, the OCG’s audit report recommended that a variety of measures be taken to ensure that the CSA has reliable information, implements operational monitoring mechanisms and defines reporting requirements.

Implementation Status

To date, management has not carried out any of the OCG’s recommendations. It should be noted that management’s action plan covers only some of the recommendations made by the OCG, including:

Bar chart (Implementation status): Contracting and Monitoring Information Systems

Reliable information

  • Officially document contracting processes and identify data integrity monitoring mechanisms;
  • Establish and document roles and responsibilities;

Relevant information

  • Develop an official mechanism that defines the required contracting information;

Monitoring

  • Develop monitoring mechanisms that take into account the risks involved in contracts and compliance requirements;

Reports

  • Define reporting requirements.

Management is presently working on improving its action plan in order to fully respond to recommendations from the OCG report.