Archived - Management Practices Review and Review of Financial Management Reporting Practices of the Alberta Region
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Author: (Audit and Evaluation Sector)
Date: (January 2008)
PD Version (978 Kb, 20 pages)
Table of Contents
- Objectives
- Methodology
- Context
- Observations - General Management
- Observations - Grants and Contributions
- Observations - Contracting
- Observation - Financial Payments
- Observations - Human Resources
- Recommendations
- Observations - Financial Management Reporting Practices (PwC)
- Recommendations (PwC)
Objectives
Management Practices Review
Provide review level assurance that grant and contribution, contracting, financial management and human resources management practices comply with authorities and are delivered consistent with the TB Management Accountability Framework
Financial Management Reporting Practices
Identify and assess the reporting practices designed to facilitate adequate, transparent financial reports
Identify potential best practices and opportunities for improvement
Methodology
- On site work conducted October 29 - November 2, 2007
- 29 interviews with staff including DG, Directors, and union representatives
- Review of a random sample of 41 human resource, 27 grant or contribution,
and 18 contracting transactions and post audited financial payments during
the 2006/7 year
- Further examination of specific transactions where risks were identified
in the above activities
- Review of budgeting, appropriations, forecasting, and reporting activities
(work undertaken by PricewaterhouseCoopers, under contract with INAC, through
interviews and limited documentation review)
Context
There are 45 First Nations in the Region:
- 20 of 45 (45%) First Nations are funded through multi-year (3 or
5 year) agreements including 13 through flow through tribal council agreements
- 2 First Nations are in co-managed intervention
- 9 are in self managed intervention
- 11 First Nations are not in intervention but are under either close
watch or emerging remedial action plans
Services delivered through treaty areas 6,7 and 8
Alberta region provincial costs and standards growing much faster than the national average
2006/7 total expenditures $712 million including $690 million in grants and contributions
Observations - General Management
Strengths
- Relationship with First Nations is positive
- Directors/Managers see their role as ensuring that staff are familiar
with their roles and what they are doing
- Regional committee structure (Management Oversight, Operational,
Policy Implementation, Fiduciary, HR, and Financial) enhances management
control framework and provides multiple checks and balances
- Experience and strengths of a number of key people
- National expertise in program areas such as education and child
and family services
- G and C accountability regime in place including early warning system
to detect risk factors in funded organizations
- HR practices led union to recommend Labour-Management Committee
for receipt of the Regional Award of Excellence
- 6 of the 9 people in the positions of Director, ARDG, and RDG are
acting in their position. The resultant uncertainty has an impact on morale
and willingness to take risks
- Because no discretionary funding available for additional costs in
other programs, Region has been re-allocating discretionary community infrastructure
funding (within the Grants and Contributions Vote 10) -creating a growing
concern about the adequacy of community infrastructure funding.
- A need exists to enhance and more clearly articulate the region's
service standards regarding regional processes and activities
- HQ turnover and structural changes have affected workload and created
needs to re-inform or redo things
- ABC/Economic Development roles need to be resolved -uncertainty has
an impact on morale and stability
- The First Nations and Inuit Transfer Payment System interface with the Integrated Capital Management System needs to be developed to allow better regional coordination of service delivery and reporting
Observations - Grants and Contributions
- Based on the limited sample of 27 transactions, the region exercises
tight control in processing grant and contribution payments
- A framework is in place to withhold funds when warranted, e.g.:
$524K in 2006 for audits not received
Two recipients without signed funding agreements by April 1 - In 2 transactions involving 2 First Nations entities child
and family service compliance requirements not met
- Proposal driven economic development projects of less than 100k were
not subject to any independent review (now being reviewed by Regional Operations
Committee)
- Implementation of December 2006 policy interpretation change (requiring individual monthly Section 34 signatures) was delayednationally due to system limitations -now in place
Observations - Contracting
- Region has had little requirement for high dollar, complex procurement
initiatives
- Headquarters no longer can support these very occasional requirements
so Region is proposing to obtain this type of support from B.C. Region
through a Centre of Expertise concept
- Review of 18 transactions revealed isolated deviations from contracting
policies, e.g.:
- year end purchase without needs list
- receiving slip not on file
- contractor did not meet mandatory criteria
Observation - Financial Payments
Treasury Board has established an allowable error rate of 5.0% above
which a corrective action plan is required
The Headquarters selected sample of Alberta Region's financial
payment transactions which was post audited in 2006 contained an error
rate of only .5%
Observations - Human Resources
- In the 2005 Public Service Employee Survey employees rated the region
significantly better than the INAC and the Public Service averages on matters
such as claiming overtime, continuity of staff, use of flexible work arrangements,
union/management relationships, and availability of accessibility tools
- Employees rated the region significantly lower than the INAC and
the Public Service averages with respect to pressure to work overtime,
number of approval stages, time taken to rethink the way work is done,
opportunities for development assignments, openness of competitions, clarity
of organizational direction and sharing of information
- The region has been significantly affected by expenditure reductions
which, in part, resulted in declaring 21 employees surplus since 2005/06
- Union expressed view that action is only taken on people issues if
a grievance is threatened
- Several staff indicated that work is much more important than the
people
- HR decisions which could not have been anticipated and included in
Human Resource Plans require Regional Human Resource Committee consideration
and approval
- 89.2% (68.8% in 2005/6) of performance reviews completed regarding
the 2006/7 year compared to a national average of 70.4%
- 85% (14.2% regarding 2006/7) of learning plans completed regarding
the 2007/8 year compared to a national average of 42.3%
- The 5 leave, 6 overtime, 5 classification and 20 staffing transactions
examined were processed appropriately and in full compliance
- 4 of the 15 staffing actions examined involved competitive acting
assignments. In each case the initial appointments had been extended for
at least 12 months and in 3 cases more than 2 years. In all cases of acting,
the positions were encumbered
Recommendations
- Region should continue to take action to respond to
2005 Public Service Employee Survey
- Region should examine practices
regarding work versus people balance
- Region should improve linkage
(e.g. via Regional Human Resource Committee Record of Decision) between
one and three year HR Plans and actual HR decisions
- Region should examine practices of extending acting appointments beyond initial appointment for periods of more than 12 months
- Headquarters should develop computer interface between First Nations
and Inuit Transfer Payment System and Integrated Capital Management System
- Region and Headquarters should examine implications of budgetary
shortfalls.
- Region and headquarters should take action to reduce number of senior
level acting appointments
- Region and headquarters should take action to resolve roles and relationships of Aboriginal Business Canada and Economic Development
Observations - Financial Management Reporting Practices (PwC)
Good Practices noted:
- Multi-dimensional financial re-forecasting and budget management
processes
- Approval process for overtime
- Regional committee formal decision process:
- Regional Investment Management Board
- Regional Financial Management Committee
- Chart of accounts leveraged to support decision-making
- Joint review of capital projects resulting in increased accuracy
of estimates
- Workload and Awareness
- Perceived workload issue for the Alberta Region staff
- Need for improved Departmental awareness of the financial management
control framework for oversight purposes as related to Financial Status
Reports and related cost driver exercises
- Perceived workload issue for the Alberta Region staff
- Forecast to Actual Management
- Close monitoring and flexibility within certain accounts allows for
some expenditure management
- Close monitoring and flexibility within certain accounts allows for
some expenditure management
- Financial Information Monitoring and Reporting
- Lack of departmental standardized, system generated financial reports
- Limited formal departmental definition of commitments and system
inability for early and complete recording of all commitments
- Alignment and Communication
- Lack of alignment between Alberta region forecast and Headquarters' allocation within the budget methodology binder
- Lack of alignment between INAC's mission and its funding instruments in allowing First Nations to revert back from multi-year to more restrictive funding instruments
- Limited alignment in departmental organizational structure and budgetary management structure
Recommendations (PwC)
- Deputy Minister should realign accountabilities and responsibilities
so that the provider of financial services in regions reports to the CFO
for improved alignment in funding decisions
- CFO should continue with the focus on implementing the CFO model
- CFO should ensure there is a national audit of payments and agreements
pertaining to vote 10 to ensure proper authorities are being respected
and obtain evidence on the consistency of financial management practices
across the Department
- CFO should develop and maintain a protocol for managing soft commitments
including definitions, rules and necessary system modifications
- CFO should expand the use of the chart of accounts in order to minimize
the use of spreadsheets
- CFO, as part of the CFO model implementation, should consider making
use of Alberta region best practices in other regions
- ADM SEPRO and RDGs should review past studies, e.g. Expenditure Review,
with the view to implementing opportunities to alleviate budgetary and
workload pressures
- Internal audit should document the management control framework in
the regions and evaluate in terms of controls, risk management and governance,
and compliance with the Accountability Act