Archived: Risk-based audit and evaluation plan: 2013-14 to 2017-18: chapter 4

4. Integrated Plan

The audit and evaluation coverage proposed in this RBAEP strives to seek an effective balance between a number of different requirements and considerations, and does so in the context of current budget constraints (section 4.4). In addition to the Policy requirements and the Departmental priorities outlined previously (sections 2 and 3), the detailed audit and evaluation plans cover the key aspects of the Department’s programs and operations, as detailed in this section.

Please note that an integrated summary of the multi-year audit and evaluation plans is presented in section 4.6, and the more detailed audit and evaluation plans are presented in appendices A and B. 

4.1 Audit Plan Overview

A. Overview

The Internal Audit (IA) Directorate provides assurance and advice to the DMs and senior management through objective and independent evidence-based information and assessment on the adequacy of management practices, controls and accountability mechanisms. Other activities can include providing management advisory services or conducting special assignments and investigations. Internal Audit also monitors the implementation of audit recommendations and related management action plans, in order to provide assurance that previous audit findings and issues are effectively addressed. In addition, the Directorate coordinates the liaison with all external assurance providers or auditors (such as CESD, OAG and PSC). This includes providing advice to the DMs, senior managers and committees (EAAC and DEC) regarding external audit reports. The Directorate also assists departmental managers in responding to environmental petitions received from the CESD.

B. Plan Summary

The internal audit plan includes a total of 17 projects planned over three years, in addition to 7 projects currently underway that will be completed in 2013-14 or 2014-15. The plan is based on available resources consistent with the anticipated initial Branch budget (section 4.5) and reflects a total staff complement of 9 Full Time Equivalents (FTEs; excluding 2 FTEs for external audit liaison) and relies only minimally on external professional services. Of the 17 planned projects:

• 8 projects are carried forward from last year’s audit plan. These include six projects mostly selected based on risks and two projects based in part on central agency recommendations or requirements^Footnote 8.
• 9 projects are newly planned and aligned to key risks, and/or to senior management's recommendations. These will include one project that will be starting in 2013-14: Information Technology Security (in collaboration with Shared Services Canada).

The detailed internal audit plan (Appendix A) briefly identifies all assurance and other engagements planned for the next three years, and provides initial project descriptions and rationale (i.e. link to departmental priorities and risks). 

C. Governance, Risk Management and Controls

Internal Audit is intended to provide independent assessment of the effectiveness of the Department's risk management, control and governance processes. The AEB has considered in its multi-year audit plan the necessary coverage of these topics:

• All planned audit projects will consider key management and internal controls processes related to the specific areas they cover. For instance, management controls around the implementation of international agreements or about the process of developing regulations. Some projects will cover department-wide (e.g. functional) controls, for example pertaining to: Financial management, Procurement, Staffing, Expenditure management. MAF core controls are always considered as part of the audit planning phase.
• An internal audit of departmental risk management was recently completed in 2011-12. As well, most audit projects included in the plan cover risk management to some extent, while some more clearly focus on risk management, in particular the following: Fraud Risk Management, Information Technology Security, and Emergency Planning and Management.
• In regard to governance, the plan includes a specific audit project on the corporate governance of the department (in 2013-14).

D. Departmental Risks, Priorities and MAF

The three-year internal audit plan takes into consideration alignment with key risks and considerations, departmental priorities and the key elements of the Government's Management and Accountability Framework (MAF). Specifically:

• The detailed audit plan (Appendix A) indicates, for each audit projects, the link with the risk assessment conducted by AEB, the link to departmental priorities and the link to key elements of the MAF.
• The assessment of key risks and other related considerations conducted by AEB, summarized in Appendix C, was based on different sources of information, including the Corporate Risk Profile, consultations with senior management, and recent MAF assessments. 

E. External Audit Liaison

The AEB is responsible for liaison with the Office of the Auditor General (OAG), the Commissioner of the Environment and Sustainable Development (CESD), the Public Service Commission (PSC) and other external assurance providers. As such, the Branch coordinates any external audits or assessments conducted by these organizations, and fosters ongoing professional liaison and communication with them.

A number of external audits and studies are underway or planned by external assurance providers. These external audits and studies were taken into account in the plan to ensure proper coverage and minimize duplication of efforts, based on external assurance organizations work plans provided to date. The Summary Audit and Evaluation Plan (section 4.6) includes known external audits and studies underway or to be carried out during the period covered by this plan. 

Also included in the plan is one horizontal audit of Procurement to be performed in collaboration with the Office of the Comptroller General (OCG). Under the Policy on Internal Audit, the OCG can direct departments to conduct sectorial and horizontal audits (i.e. government-wide), and can also perform department-specific audits. The AEB has indicated to the OCG its preference to participate in the horizontal audit of the Management and Delivery of Procurement, planned for 2013-14, which would be combined with AEB's internal audit of the same topic. 

4.2 Evaluation Plan Overview

A. Overview

The Evaluation Directorate ensures that departmental management receives timely, strategically focused, objective and evidence-based information on the relevance and performance of EC programs and initiatives. Other activities include providing expert advice and services in the area of evaluation and performance measurement, and reviewing TB submissions and Memoranda to Cabinet to ensure existing evaluation evidence is considered and future evaluation commitments identified.

B. Plan Summary

The detailed evaluation plan presented in Appendix B includes a total of 44 evaluation projects over the next five years, and is based on an expected staff complement of 9 FTEs. The evaluation plan is consistent with the anticipated resources identified in the AEB initial budget for 2013-14 (section 4.5). The evaluation plan provides the following coverage:

• The overriding planning priority has been to ensure the statutory requirements of the Financial Administration Act (FAA), and all evaluation commitments specified in TB submissions, are fulfilled. Accordingly, the plan provides for full (100%) coverage of all transfer payment programs (G&C) and existing TB evaluation commitments within the 5 year planning period.
• The current plan includes a total of 44 distinct evaluation projects. Of these, there are:
  • 9 evaluations of programs with grants and contributions, as per the FAA,
  • 16 evaluation commitments linked to TB submissions,
  • 17 evaluations of programs with both G&C and TB evaluation commitments, and
  • 2 risk-based evaluations, in that they are neither driven by a TB commitment nor involve a G&C mandatory evaluation.
• The estimated evaluation coverage of direct program spending (DPS) proposed in the plan amounts to 95% over the next five years, and does not fully meet the TB Evaluation Policy requirement of 100% coverage. The plan relies primarily on the use of PAA-level evaluations to maximize evaluation coverage by expanding the scope of planned evaluations to cover entire elements of the PAA. The use of the PAA-based evaluations to maximize coverage is an on-going effort and continues to be developed to maximize departmental coverage to the extent possible. AEB’s strategy and approach to maximize evaluation coverage has recently been presented and endorsed at DEC.

The resources required to evaluate a program depend primarily on the program’s nature (e.g. complexity, evaluability^Footnote 9, horizontality), rather than its materiality. As such, there is a great deal of variability in annual average DPS coverage rates, despite similar annual resource investments. Please refer to Appendix B for the estimated annual planned evaluation coverage for each of the plan’s 5 years.

Also, the detailed plan in Appendix B identifies each evaluation project for the next five years, and includes the estimated resource requirements in person days and dollars, and estimated G&C and DPS coverage. The appendix also identifies anticipated interdepartmental evaluations carried out by other departments in which EC will be involved.

4.3 Branch Planning and Coordination

The Strategic Planning and Coordination (SPC) Directorate is responsible for a variety of functions and activities that effectively contribute to the Department’s and AEB’s priorities. SPC is primarily responsible to:

• Coordinate AEB’s risk-based audit and evaluation plans and annual report;
• Coordinate regular monitoring and follow-up on status of outstanding management actions in response to prior audit and evaluation report recommendations; 
• Maintain AEB’s overall quality assurance and project management frameworks;
• Support the EAAC and the DEC;
• Coordinate Branch-wide management functions such as pertaining to procurement, financial and human resources;
• Coordinate AEB consultation or participation in EC corporate exercises (e.g. MAF, DPR/RPP, CRP).

4.4 Human Resources

A. HR Planning

Integrated workforce planning is important in ensuring that the AEB is equipped with the HR capacity required to deliver its priorities and the RBAEP. The Branch HR integrated plan will be updated in 2013-14 to reflect the Branch’s resources and priorities.

B. AEB Organization

The Branch is organized into 4 units: the Internal Audit Directorate, the Evaluation Directorate, the Strategic Planning and Coordination (SPC) Directorate and the Director General’s office (DGO). AEB’s total complement of 28 distributed as follow: Internal Audit 11, Evaluation 9, SPC 6 and DGO 2.

C. Professional Development and Designations

An essential AEB priority is to ensure that staff has the necessary professional qualifications, expertise and skills to carry out their responsibilities, and that ample opportunities are provided for training and development to maintain and develop their competencies. This year, AEB will maintain a minimal training and development budget for each employee, as well as provide additional funding based on specific needs and requests (where appropriate). Also, AEB strives to ensure that every employee has a personal learning and development plan to help them acquire and maintain the competencies related to their functions and career aspirations. 

Training is also made available to support professional accreditation and designations. Particularly in the internal audit group there are requirement to acquire and maintain a range of professional accounting and auditing designations. Currently, approximately ⅓ of the professional staff of the internal audit group has a professional designation (i.e. two Certified Internal Auditors (CIA), one Certified Information Systems Auditor (CISA), four accounting/auditing designations (CMA, CGA, CA) and one Certified Fraud Examiner).

4.5 Budget and Resources

A. Initial Budget

The AEB initial approved budget on which this plan is based totals $3,175K as presented in the following table (A-base only).

The following key points should be considered to properly interpret the AEB’s budget and resource situation:

• The budgets presented exclude the specific funds transferred from programs during the year to perform mandatory program evaluations as provided under corresponding program approvals (B-base funds). B-base funds for 2013-14 are expected to amount to $140K. As well, Departmental budgets normally get adjusted during the year as the result of budget review exercises.
• The above table indicates a small budget increase of $69K ($3,106 to $3,175). This is due primarily to the TB Policy requirement to complete in 2013-14 an external practice review of the audit function, and a neutral assessment of the evaluation function, as well as general cost increases.
• AEB forecasted year-end expenses for 2012-13, after consideration of various in-year budget adjustments, totaled $3,213 at year end (A-base only). In addition, $527K in program specific B-base funds was spent.
• Based on current staff levels, AEB forecasts a total salary expense of approximately $2,650K for 2013-14 compared to actual salary costs of $2,640K in 2012-13. After consideration of additional workforce adjustment costs incurred in 2012-13, the salary budget for 2013-14 is comparatively slightly higher to account for minor economic increases and the stabilization of AEB’s workforce.

B. Project Resources

The initial Branch budget and planned FTE complement (28) translates into approximately 2,300 person-days available to undertake internal audit and evaluation projects, and related activities. The resources available for AEB projects - both person-days (PD) and professional services budgets - are summarized in the following table. Note that these project resources pertain only to the audit and evaluation Directorates, and do not reflect the requirements for SPC, DGO and administrative support.

Project Resources Summary (person-days)

For multi-year planning purposes, the detailed audit and evaluation plans are based on the assumption that project resources available in future years (e.g. after 2013-14) would be similar to resources available for 2013-14.

Statement of Feasibility

Based on the planned budget and resources presented above, AEB expects to be able to deliver its RBAEP and its planned audit and evaluation projects, which are based on highest audit and evaluation priorities over the planning horizon. Should the feasibility of delivering on the RBAEP be constrained by available resources or other factors, the DG of AEB will bring this to the attention of the EAAC and DEC for consideration and will recommend any necessary changes to the RBAEP to the DM for approval.

4.6 Audit and Evaluation Plan Summary

The table on the subsequent pages summarizes in a comparative format all internal audit and evaluation projects planned over the next 3 years and 5 years respectively, and accordingly presents an integrated view of all the AEB planned coverage. The table also includes known external audit engagements such as pertaining to the Commissioner of the Environment and Sustainable Development. The table is organized according to key MAF elements.

The table presents projects by year of their planned completion. The presentation is somewhat of an oversimplification, as projects may begin and end in different quarters throughout the fiscal year. 

The external audits presented in the table are those known to the department at the time of the creation of this planning document. It may be subject to change and does not necessarily represent all the audits that will be undertaken by external assurance providers in the time period identified. Also, presented in the table are evaluations projects labelled as “Unfunded”. These unfunded evaluations represent projects which cannot be undertaken under the current budget, but which would be required to meet the TB Policy’s required 100% DPS coverage. These would be considered should additional funds be made available (e.g. through mid-year review) or should other projects be delayed. The detailed audit and evaluation plans attached (Appendix A and B) provide more comprehensive information on the planned projects.

Table - Audit and Evaluation Plan Summary

1. Policy and Programs

2. Citizen-Focussed Service

3. Governance and Strategic Directions

4. Risk Management

5. Results and Performance

6. Stewardship

7. People

8. Public Service Values

9. Accountability

10. Learning, Innovation and Change Management

Legend:
* = Projects in progress (started prior to 2013-14)

Audit projects from last year’s RBAEP planned for 2013-14 that were removed for various reasons:

• Waste Reduction and Management
• Change Control and Configuration Management
• Departmental Sustainable Development Strategy
• Identified as lower risk and priority following discussion with Branch Head and DM
• IT now with Shared Services Canada
• Incorporated with External Reporting and Performance project