Audit reports 2014-2015: 7 - Audit of the Federal Economic Development Agency for Southern Ontario

Table of Contents

• Audit of the Federal Economic Development Agency for Southern Ontario
• Observations on the Appointment Framework
• Observations on appointments
• Recommendations
• Overall response by Federal Economic Development Agency for Southern Ontario
• Action taken by the Public Service Commission
• Appendix

Audit of the Federal Economic Development Agency for Southern Ontario

7.1 This audit covers the Federal Economic Development Agency for Southern Ontario’s (FedDev Ontario) appointment activities for the period of November 1, 2012, to October 31, 2014. The first objective of the audit was to determine whether FedDev Ontario had an appropriate framework, practices and systems in place to manage its appointment activities. The second objective was to determine if appointments and appointment processes in FedDev Ontario complied with the Public Service Employment Act (PSEA), any other applicable statutory and regulatory instruments, the Public Service Commission’s (PSC) Appointment Framework, including the Appointment Delegation and Accountability Instrument (ADAI) and the organization’s own appointment policies.

7.2 FedDev Ontario was created in August 2009, as a priority outlined in the Government of Canada’s Budget 2009, to help the region of southern Ontario mitigate and overcome regional and global economic challenges. At the time, it was provided $1 billion over five years to financially support priorities of southern Ontario communities, businesses and not-for-profit organizations primarily geared to technological innovation, business development and community economic development. The Government’s Budget 2013 extended the mandate by another five years.

7.3 According to FedDev Ontario, the Agency has faced human resources (HR) challenges since its creation in 2009. FedDev Ontario initially started with a block transfer of 38 employees from another federal organization. This number of employees increased to 188 by August 2011. FedDev Ontario indicated that it has been challenging to staff positions in the Kitchener office that require public service experience in leadership and specialized functional areas.

7.4 During the period covered by our audit, FedDev Ontario informed us that there was uncertainty surrounding the renewal of the Agency’s mandate and a significant turnover of its executive positions. Consequently, the PSC did not audit whether FedDev Ontario had developed staffing plans and related strategies that were measurable, approved and communicated to employees. Following the period covered by our audit, FedDev Ontario indicated that it had established three staffing priorities and related strategies for 2014-2015, which were approved by the President and communicated to employees in January 2015.

7.5 As of March 31, 2014, FedDev Ontario had 223 employees. The organization carried out 52 appointments within the scope of our audit. As part of our audit, we conducted interviews with HR professionals and sub-delegated managers involved in appointment activities, analyzed relevant documentation and audited a representative sample of 25 appointments.

Observations on the Appointment Framework

Sub-delegation of appointment authorities

7.6 The PSEA gives the PSC exclusive authority to make appointments to and within the public service. The PSC delegates many of its appointment and appointment-related authorities to deputy heads who, in turn, may sub-delegate the exercise of these authorities. The PSC expects deputy heads to have a sub-delegation instrument in place that is well managed and accessible across the organization.

7.7 FedDev Ontario was subject to the ADAI since its creation, delegating the President appointment and appointment-related authorities. The ADAI has been communicated to employees on FedDev Ontario’s intranet site.

7.8 We found that FedDev Ontario had established a sub-delegation instrument entitled “Instrument of Delegation of Human Resources Authorities” that outlined roles and responsibilities of sub-delegated managers. We noted that no requirement was formally defined in the sub-delegation instrument with respect to the training to be completed prior to being sub-delegated. However, we noted that the sub-delegation process evolved during the period covered by our audit and that under the current President, HR would prepare a briefing note detailing the training completed for each manager and, on that basis, the President would issue a letter to the manager granting sub-delegation authorities.

7.9 As per the ADAI, the sub-delegation terms and conditions must also be accessible to all sub-delegated persons and employees within their jurisdiction. In April 2015, FedDev Ontario confirmed that the requirements that must be met prior to being sub-delegated were formally established and communicated to all employees on FedDev Ontario’s intranet site.

Appointment policies

7.10 The PSC expects deputy heads to establish mandatory appointment policies for area of selection, corrective action and revocation, as well as criteria for the use of non-advertised processes. The PSC also expects the other appointment policies that organizations develop be compliant with the PSEA, any other applicable statutory and regulatory instruments and the PSC’s Appointment Framework.

7.11 We found that FedDev Ontario put in place the mandatory appointment policies as well as criteria for the use of non-advertised appointment processes and that they were communicated and accessible to employees on FedDev Ontario’s intranet site.

7.12 We also found that organizational policies and criteria contained the provisions required by the PSC, with the exception of the Area of Selection Policy. We found that the FedDev Ontario Area of Selection Policy did not require the use of the national area of selection (NAOS) for all external advertised processes as required by the PSC’s Appointment Policy. This requirement was included in an annex of the FedDev Ontario policy and was presented as a consideration only. This situation could have led to managers not being aware of this mandatory requirement and affect access to employment opportunities. Despite this fact, we noted that the risk identified above did not materialize as FedDev Ontario used the prescribed NAOS for all the external processes advertised within the period covered by our audit.

7.13 During the course of our audit, FedDev Ontario revised its Area of Selection Policy to include the use of the NAOS under the “Requirements” section.

Capacity to deliver

7.14 The PSC expects deputy heads to ensure that those who have been assigned a role in appointment processes have been informed of their roles and responsibilities and have access to tools and the HR support to carry out this role.

7.15 We found that roles and responsibilities were defined and communicated in various documents such as the sub-delegation instrument and appointment policies. Various staffing tools, guides and templates were accessible to sub-delegated managers through the organization’s shared drive, such as the non-advertised rationale template and tips for managers on how to conduct interviews. In December 2014, FedDev Ontario also developed and shared a Staffing Guide for Managers.

7.16 We found that sub-delegated managers had access to an HR advisor who had passed the PSC’s Appointment Framework Knowledge Test. This test is designed to evaluate knowledge of all parts of the PSC’s Appointment Framework (policy, delegation and accountability) and the legislative framework.

7.17 The sub-delegation instrument and letter indicated that sub-delegated managers were encouraged to seek advice from their HR advisor. Although there is no requirement to document the advice provided, for the appointments reviewed for which we saw evidence of the advice given by the HR advisor, it was compliant with the PSC’s Appointment Framework.

Monitoring

7.18 Monitoring is an ongoing process that allows deputy heads to assess staffing management and performance related to appointments and appointment processes. Monitoring makes it possible to identify issues that should be corrected, to manage and minimize risk and to improve staffing performance. The PSC expects deputy heads to undertake the mandatory monitoring outlined in the PSC’s Appointment Framework, including the ADAI, and adjust practices accordingly.

7.19 FedDev Ontario established a Staffing Monitoring Framework to focus on trends, identify issues, assess potential risks and provide communication and recommendations on appropriate action. We found that FedDev Ontario reviewed appointments and appointment processes to ensure that its appointment activities were compliant with the PSEA as well as any other statutory requirements and policies.

7.20 We also found that all mandatory monitoring of risk-based policy areas was completed (e.g., acting appointments over 12 months and appointments of casual workers to term or indeterminate status through non-advertised processes). This monitoring was conducted through an analysis of the HR database. We conducted an analysis of FedDev Ontario’s HR database and found that it was sufficiently accurate to produce reliable information regarding appointment processes.

7.21 The results of these monitoring exercises, as well as actions taken to address the areas for improvement, were presented to senior management on a semi-annual basis. FedDev Ontario also indicated that the HR advisors and assistants were informed of the issues identified through the monitoring of appointments and appointment processes.

Observations on appointments

Appointments – Merit

7.22 The PSEA requires that all appointments be made on the basis of merit. Merit is met when the Commission is satisfied that the person to be appointed meets the essential qualifications for the work to be performed, as established by the deputy head and, if applicable, any asset qualifications or organizational needs identified by the deputy head.

7.23 We found that FedDev Ontario demonstrated that the person appointed met the essential and asset qualifications and organizational needs established by the deputy head in 84% (21 out of 25) of the appointments reviewed. However, merit was not demonstrated in 12% (3 out of 25) of appointments and not met in 4% (1 out of 25) of appointments.

7.24 In the interest of promoting understanding and learning, the following section provides additional information on appointments where merit was not demonstrated or was not met. In one appointment where merit was not demonstrated, the appointee had failed an essential qualification at the interview stage and the manager requested that reference checks be performed. However, FedDev Ontario was unable to provide evidence to demonstrate that the qualification was assessed through reference checks. In another case, some of the merit criteria, namely the leadership competencies that were used to make the appointment, were not assessed individually, which is a requirement of the Treasury Board Secretariat’s qualification standard for the Executive Group. In the third case where merit was not demonstrated, there was insufficient evidence to demonstrate how the appointee met the education or qualification standard. Finally, in the case where merit was not met, the appointee did not meet an asset qualification used to make the appointment. The Appendix includes tables detailing our observations concerning merit for the appointments audited. Refer to recommendation 1 at the end of this report.

Appointments – Other requirements

Persons with a priority entitlement

7.25 The PSEA and the Public Service Employment Regulations provide an entitlement for certain persons who meet specific conditions to be appointed in priority to others. The organization must take into consideration persons with priority entitlements prior to making appointments and must obtain a priority clearance number from the PSC before proceeding with an appointment process or an appointment.

7.26 All appointments reviewed required and received a priority clearance before proceeding with an appointment. In most instances, we found that persons with a priority entitlement were adequately considered. However, in two instances, there were differences in the essential qualifications and position requirements used in the request for priority clearance and those used to make the appointment. For example, the position location used to obtain the priority clearance was Kitchener, whereas the appointee worked in Toronto. Such situations could have resulted in persons with a priority entitlement not being properly considered. Refer to recommendation 2 at the end of this report.

Information on appointment processes

7.27 The PSC’s Policy on Advertising in the Appointment Process and Policy on Official Languages in the Appointment Process require that information be provided to allow persons in the area of selection to make an informed decision and that the information concerning appointment processes be communicated in both official languages, when required.

7.28 We found that in 40% (10 out of 25) of the appointments, the English and French versions of the advertisement or the Statement of Merit Criteria (SMC) were not identical. For example, the English version of the SMC stated: “Experience preparing or assessing business or economic development plans or strategies”, while the French version stated: “Expérience de la préparation ou l’évaluation ou des plans de développement économique ou de stratégies”. Therefore, the French version of the SMC did not require the same experience as the English version. Inaccurate information on an advertisement or SMC could have had an impact on the decision of potential candidates to apply. Refer to recommendation 1 at the end of this report.

Oath or solemn affirmation

7.29 As required by the PSEA, the effective date of appointment for a person being newly appointed to the public service is the later of the date that is agreed to in writing by the sub-delegated manager and the appointee and the date on which the appointee takes and subscribes the oath or solemn affirmation. As per the ADAI, the authority to administer the oath was delegated to the President who, in turn, sub-delegated this authority to certain employees through the sub-delegation instrument.

7.30 As part of our sample, nine appointments reviewed required that an oath or solemn affirmation be taken. While the requirement was met in most instances, we found that for one appointment the oath or solemn affirmation was not taken on or before the date of the appointment identified in the offer of appointment. In another instance the oath or solemn affirmation was not administered by an authorized person. As a result, these two persons were appointed without having met the legal requirement of the PSEA or the organizational requirements. Refer to recommendation 1 at the end of this report.

Recommendations

1. The President of the Federal Economic Development Agency for Southern Ontario should ensure that:

• All of the qualifications used to make the appointment are fully assessed and met before proceeding with the appointment;
• Information on appointment and/or advertisements provided to potential candidates or persons entitled to be notified is the same in both official languages; and
• The person to be appointed takes and subscribes the oath or solemn affirmation in front of an authorized person prior to or on the date of the appointment, when applicable.

2. The President of the Federal Economic Development Agency for Southern Ontario should ensure that the essential qualifications and position requirements used for the appointment decision and those used to request priority clearance are the same.

Overall response by Federal Economic Development Agency for Southern Ontario

The Federal Economic Development Agency for Southern Ontario (FedDev Ontario) has reviewed the Public Service Commission’s audit report and accepts its findings and recommendations.

FedDev Ontario takes its delegated staffing authorities seriously and is dedicated to ensuring appointments are made in accordance with legislative, regulatory and policy requirements.

The audit process provided valuable insight and information regarding areas of strength and areas for improvement. FedDev Ontario is committed to addressing the findings and recommendations in a timely manner. An action plan to further improve staffing practices has been developed in response to the audit findings. To supplement the action plan, a Staffing Education Strategy is being implemented to embed within the Agency a comprehensive understanding of staffing requirements, roles and flexibilities.

Action taken by the Public Service Commission

Organizations that have been audited by the Public Service Commission (PSC) receive guidance and assistance from the PSC to develop an action plan that will address the audit recommendations. The PSC systematically reviews audit information, the organization’s management response and associated action that it has taken or will take in response to the audit recommendations to determine whether any action should be taken by the PSC. As a result of this review, the PSC is satisfied with the Federal Economic Development Agency for Southern Ontario’s management response and the actions it has taken or has committed to take to address the audit recommendations. The PSC expects the deputy head to monitor the implementation of the organizational action plan and the PSC may request an update on the action plan. The PSC can provide assistance for this implementation as required.

Appendix

Source: Audit and Data Services Branch, Public Service Commission

Source: Audit and Data Services Branch, Public Service Commission