Internal Audit – Real Property

Final Report

Audit, Evaluation, and Risk Branch

January 2020

Note to reader:  

Please note that in the spirit of the Access to Information Act, some information within this document cannot be disclosed for reasons related to Confidences of the Queen’s Privy Council.

Table of contents

Executive summary

The Canada Revenue Agency (CRA) has legislative authority over all CRA real property and immovables as prescribed under the Canada Revenue Agency Act. Additionally, this act provides the CRA with the authority to choose its own provider of goods and services, with the exception of legal services. In 1999, the CRA selected Public Services and Procurement Canada (PSPC)Footnote 1 as its exclusive service provider for the provision of accommodations and services and renewed its partnership with the PSPC in 2007 through the Real Property Service Agreement.

At the CRA, the Real Property and Service Integration Directorate of the Finance and Administration Branch acts as the corporate owner of and investor for the real property portfolio. It is also the functional authority for real property and the national centre of expertise for the Real Property Program. In addition to the Real Property and Service Integration Directorate, there are 6 real property operating regions, 5 of which are aligned with the CRA regions and the 6th being the National Capital Region, that provide real property/accommodations services to their respective clients.

The objective of this audit was to provide the Commissioner, CRA management, and the Board of Management with assurance that the CRA’s Real Property Program has the management framework and mechanisms in place to support its accountabilities and objectives as well as CRA and Board of Management priorities, in particular service, people, and financial resources.

Overall, the audit team found that the CRA’s Real Property Program has the basic management framework and mechanisms in place to support its accountabilities and objectives as well as CRA and Board of Management priorities. However, the audit team noted that the approach for managing the CRA’s real property authorities, including retaining the Director General of the Real Property and Service Integration Directorate as a dual reporting position and a PSPC employee, is partially beneficial to the Real Property Program. Also, the CRA receives only some of the anticipated benefits of having PSPC as its service provider. Furthermore, the CRA and PSPC have not evaluated their arrangement since 2012 and, although their business framework is subject to an annual review, the agreement has not been updated since 2015.

Additionally, the audit team found that while the real property organizational structures have been fully articulated, approved, and implemented, the Real Property and Service Integration Directorate is not functioning as intended due to financial constraints and human resource challenges. As a result, the directorate is not entirely fulfilling its functional authority and managerial responsibilities.

Also, the team observed that the stakeholders under the regional model feel they are receiving the expected level of real property/accommodation services; however, this is not the case for those in the National Capital Region.

Lastly, the audit team found that, with the exception of the CRA national real property committees, stakeholders’ roles and responsibilities are defined, documented, communicated, and adequately understood.

Summary of recommendations

The Finance and Administration Branch should:

Management response

Real property services are delivered in a complex and decentralized environment with internal clients, external stakeholders and a unique partnering relationship with PSPC. The relationship is described and governed through an agreement approved by the Treasury Board of Canada Secretariat. Expectations for real property services have evolved and with this comes opportunities for improvements as noted in this internal audit. Consequently, a robust management action plan has been developed with the objective of delivering responsive real property services in support of a modern workspace that meets the needs of CRA programs.

The first element in the management action plan is to examine the current arrangement of real property service delivery between the CRA and PSPC, assess the benefits, and determine its relevancy to both parties. An improvement plan will be developed to address the findings, as required. As this could result in a fundamental shift of how real property services are delivered at the CRA, all the remaining actions are subject to change. Therefore, upon finalization of the assessment results and the improvement plan, the entire management action plan will also be reviewed and updated accordingly.

The proposed actions build on past successes and lessons learned that allowed the Real Property Program to continually provide accommodations for all employees, including in times of rapid growth prompted by investments from federal budgets of 2016 to 2019, and major organizational changes, such as service renewal.

More recently, the Real Property Program further strengthened its governance by expanding the membership and scope of its Assistant Commissioner level governance, the Real Property Forum, to better address strategic real property priorities nationally. Similarly, improvements were made to the consultative approach and approval process for the CRA national portfolio investment plan. Finally, a new consolidated funding model was implemented that allows for a more standardized and stable process for funding real property projects that helps ensure standard office design for all employees.

Looking forward, to further advance the Real Property Program, the Finance and Administration Branch will undertake the following key actions:

This management action plan will provide a roadmap for the Finance and Administration Branch to deliver better services to its clients and continue to improve the Real Property Program.

The Audit, Evaluation, and Risk Branch has determined that the Finance and Administration Branch’s action plans appear reasonable to address the recommendations.

1. Introduction

The Canada Revenue Agency (CRA) has legislative authority over all CRA real property and immovables per paragraph 30(1)(c) of the Canada Revenue Agency Act. Additionally, section 66 of the CRA Act provides the CRA with the authority to choose its own service provider for goods and services, with the exception of legal services.

In 1999, the CRA selected Public Services and Procurement Canada (PSPC)Footnote 2 as its exclusive service provider for the provision of accommodations and services. PROTECTED.

The partnership between the CRA and PSPC is managed through the Real Property Service Agreement, which establishes PSPC as the custodian of real property services and the CRA as the tenant. Under this agreement, each organization carries out both shared and distinct responsibilities that reflect their accountabilities. The CRA’s accountabilities are:

PSPC’s accountabilities “encompass the provision of quality, timely and cost-effective accommodation solutions and real property services that meet the CRA’s specifications and requirements in a business-like environment that is client-oriented and promotes innovation and flexibility.”Footnote 3

The CRA currently occupies an extensive portfolio of office and ancillary space in 102 locations in 57 cities across Canada. This amounts to over 770,000 rentable square meters of space. Of this, 90% is classified as general purpose office space while the remainder is composed of special purpose space used for non-office functions, such as processing, mail, storage, or warehousing. The CRA’s accommodation portfolio is composed of a mix of crown-owned (45%) and crown-leased (55%) space and represents 11% of the PSPC portfolio.

At the CRA, the Real Property and Service Integration Directorate of the Finance and Administration Branch acts as the corporate owner of and investor for the real property portfolio. It is also the functional authority for real property and the national centre of expertise for the Real Property Program.

The Real Property Program encompasses a total of 233 full-time equivalent employees, 66 of whom are in Headquarters and 167 in the regions. The program provides services through 6 operational regions: Atlantic, Quebec, Ontario, Prairies, Pacific and the National Capital. The National Capital Region reports to the Real Property and Service Integration Directorate.Footnote 4 The 2019 to 2020 real property budget is $336 million, which includes $298 million related to the real property reimbursing regime; $16 million for real property major tenant services projects; and $22 million for salaries, operations and maintenance.

Refer to Appendix A for more details on the organization of real property at the CRA.

Prior to this engagement, in 2009, the Real Property Program underwent an internal audit related to its management framework. This earlier audit found that while a basic management framework had been implemented, opportunities existed to improve and further develop the framework. This resulted in 15 recommendations, which were implemented by February 2017. Although the 2009 recommendations appeared to have been addressed, this 2019 internal audit found similar issues to the 2009 internal audit, which suggest that these issues are re-emerging.

PROTECTED. This review found that improvements were needed to strengthen the business arrangement between both organizations. As a result, 8 recommendations were made, which the Real Property and Service Integration Directorate has indicated have since been implemented.

2. Focus of the audit

This internal audit was first included in the Board of Management approved Risk-Based Audit and Evaluation Plan 2017 to 2020. The Assignment Planning Memorandum was approved by the Management Audit and Evaluation Committee on June 26, 2018.

2.1. Objective

The audit objective was to provide the Commissioner, CRA management, and the Board of Management with assurance that the CRA’s Real Property Program has the management framework and mechanisms in place to support its accountabilities and objectives as well as CRA and Board of Management priorities, in particular service, people, and financial resources.

2.2. Scope

Although the real property roles, responsibilities, and activities are integrated between the CRA and PSPC, the audit team examined these aspects only with respect to the CRA.

The period covered in this audit is from April 1, 2015 to December 31, 2018.

2.3. Audit criteria and methodology

Interviews and review of key documentation were conducted at Headquarters, selected regional and field offices, and in the National Capital Region. This audit also involved consultations with PSPC and other government departments.

Refer to Appendix B for information on the number of interviews and participants.

The audit criteria and methodology can be found in Appendix C.

The examination phase of the audit took place from July 2018 to July 2019. The audit was conducted in accordance with the International Standards for the Professional Practice of  Internal Auditing, as supported by the results of the quality assurance and improvement program.

3. Findings, recommendations, and action plans

The recommendations presented in this report address issues of high significance or mandatory requirements.

The Finance and Administration Branch agrees with the recommendations in this report and has developed related action plans. The Audit, Evaluation, and Risk Branch has determined that they appear reasonable to address the recommendations.

3.1.  Program management

3.1.1 The approach for managing the CRA’s real property authorities, including retaining the Director General of Real Property and Service Integration Directorate, as a dual reporting position and a PSPC employee, is partially beneficial to the Real Property Program.

While PSPC has been the CRA’s exclusive real property services provider since the creation of the CRA in 1999, this relationship was renewed in 2007 through the Real Property Service Agreement. The audit team assessed whether the original incentives for proceeding with this arrangement are still relevant or applicable to the CRA and found that CRA receives some of these incentives as outlined in Table 1 below.

Table 1: Initiatives and statuses
Initiative Status
Rent Price Protection The CRA still continues to receive price protection in terms of its rent.
Space reductions, which resulted in savings that would be transferred to one’s operating budget The Treasury Board of Canada eliminated the ability to benefit from the savings through space reductions for all departments, including the CRA. When the incentive was in place, the CRA achieved $63 million in savings, which the CRA continues to benefit from on an annual basis.
PSPC was to provide innovative real property services to the CRA These aspects were not fully examined as part of this audit and will be addressed in a subsequent phase. See Appendix C for additional information.
The CRA was to leverage PSPC’s real property expertise As available documentation of how the CRA would leverage PSPC’s real property expertise lacked context and since interview responses were conflicting, the audit team was unable to conclude on this aspect.

Although an analysis identified that the CRA determines the direction of and ultimately makes decisions regarding the Real Property Program, the CRA and PSPC have not formally evaluated other options against this unique arrangement since the 2012 third-party review. As a result of that review, updates were made to the 2015 Real Property Service Agreement. However, while both organizations are responsible for conducting an annual review of this agreement, it has not been updated since 2015.

In 2002, both the CRA and PSPC jointly agreed to create the position of the Director General of the Real Property and Service Integration Directorate to lead the CRA Real Property Program. This position was created as a dual-reporting position that, as an employee of PSPC, reports to the Assistant Deputy Minister of the Real Property Branch in PSPC as well as to the CRA Chief Financial Officer and Assistant Commissioner of the Finance and Administration Branch. The reason for creating the position in this manner was not evident in the documentation available. More specifically, none of the documentation reviewed specified why the Director General is an employee of PSPC rather than of the CRA. However, some documents indicated the need for an integrated service team of CRA and PSPC employees that is led by a dual-reporting Director General in order to address service delivery.

CRA stakeholders expressed both benefits and concerns with the CRA having a dual-reporting Director General that is a PSPC employee. Some CRA stakeholders, including Real Property and Service Integration Directorate staff, saw the following benefits:

However, over 50% of Assistant Commissioners, and Real Property and Service Integration Directorate staff interviewed, as well as some other real property stakeholders, have a perception of a conflict of interest with respect to the Director General position, such as having the position report to 2 individuals with potentially differing organizational objectives.

Additionally, stakeholders noted a potential risk with respect to the decision-making of the Director General in favour of PSPC given that this position is accountable for the decision-making for projects with estimated costs between $100 thousand and $20 million. This decision-making process includes gathering input from applicable real property committee members (see Appendix D for additional information). The audit team was unable to conclude on the Director General’s degree of influence in regard to decision-making in favour of PSPC given information management issues with respect to the completeness of real property project and funding decisions. Testing was also limited due to instances of non-compliance with respect to committee meeting documentation (see section 3.1.4 below for additional information).

Moreover, since 2012, both the CRA and PSPC have opted to maintain the dual-reporting relationship without re-examining other options to ensure that it continues to meet their respective needs, even though there have been business and organizational changes at both organizations.

To address these potential risks, the audit team found that control mechanisms have been put in place. In particular, the audit team reviewed the Director General of the Real Property and Service Integration Directorate’s performance expectations for the last 3 years (from fiscal years 2016-2017 to 2018-2019) and identified that these expectations reflected CRA and Board of Management priorities as well as the roles and responsibilities of the position. As well, the Director General operates within a framework that includes various oversight functions and a governance structure, such as the approval of the Long-Term Accommodation and Investment Plan, which sets the direction for real property activities, by senior management.

Recommendation 1

The Finance and Administration Branch should assess the benefits of the arrangement between the CRA and PSPC at least every 5 years, to determine its relevancy to both parties. This assessment should include an evaluation of having an integrated services team and a dual-reporting Director General who is a PSPC employee. Also, the Finance and Administration Branch should communicate the results of the assessment to senior management and implement changes accordingly.       

Action Plan 1

The Finance and Administration Branch will, in consultation with PSPC, assess the benefits of the arrangement between the CRA and PSPC to determine its relevancy to both parties. As this could result in a fundamental shift of how real property services are delivered at the CRA, all the remaining action plans will be reviewed and updated accordingly.

The target completion dates for this action plan are as follows:

 
ACTION DATE
Define, in consultation with PSPC, the approach as well as the terms and conditions for the assessment of the current arrangement June 2020
Perform an assessment, including an evaluation of the pros and cons of having an integrated service team and a dual-reporting Director General who is a PSPC employee, and share the results with CRA and PSPC senior management March 2021
Confirm, in consultation with PSPC, the frequency of the assessment going forward based on the results of the assessment with CRA senior management June 2021
Establish an improvement plan with implementation timelines to address the findings and recommendations from the assessment June 2021
Review, update and obtain approval for all the remaining action plans in this report based on the assessment results and the improvement plan June 2021
Initiate the implementation of the improvement plan and report on progress annually to CRA senior management until the improvement plan is complete September 2021

Recommendation 2

The Finance and Administration Branch should re-assess the Real Property Service Agreement review period and conduct reviews in compliance with its requirements to ensure that it provides an effective business management framework between the CRA and PSPC, which should also be communicated to senior management.

Action Plan 2

The Finance and Administration Branch will conduct a review of similar service agreement models that may exist within the federal government to see what review period frequency is used. Also, the Finance and Administration Branch will consider the time and effort involved with the cyclical review versus the risks associated with the review period.

The Finance and Administration Branch will recommend a proposed review period to CRA’s Chief Financial Officer and Assistant Commissioner of the Finance and Administration Branch, and PSPC’s Assistant Deputy Minister of the Real Property Branch, for agreement as per Annex 5, section 5.4 Governance and ongoing Engagement of the 2015 Real Property Service Agreement.

The target completion dates for this action are as follows:

 
ACTION DATE
Determine the approach, in consultation with PSPC, for reviewing and updating the Real Property Service Agreement to ensure that an effective business management framework is in place June 2021
Conduct a review of similar service agreement models within the federal government to determine what review frequency is used September 2021
Review and update the Real Property Service Agreement, including the review frequency September 2022
Communicate the updated Real Property Service Agreement to CRA and PSPC senior management December 2022

Recommendation 3

The Finance and Administration Branch should implement effective information management practices to ensure compliance with CRA information management policy instruments with respect to real property project and funding decisions.

Action Plan 3

The Finance and Administration Branch will commit to ensuring that real property policy and processes related to project approvals and funding decisions conform to the applicable CRA information management policy instruments.

The target completion dates for this action plan are as follows:

 
ACTION DATE
Develop a process, including control measures, to appropriately manage the information files associated with project approvals and funding decisions March 2020
Communicate and implement the process to the applicable stakeholders March 2020
Use GC Docs, in accordance with the Finance and Administration Branch implementation plan, to appropriately manage the information files associated with project approvals and funding decisions June 2020

3.1.2 The real property organizational structures have been fully articulated, approved, and implemented; however, the organization is not fully functioning as intended

The Real Property and Service Integration Directorate’s and the 5 operating regions’ organizational structures have been fully articulated, approved, and implemented. The audit team compared each area’s classified (or approved) organizational structure to its operational one. These comparisons identified that the underlying data of the 2 structures was either identical or that, if there were variances, over 91% of the variances had a sound rationale.

Since 2010, the budget allocations to the operating regions, excluding the National Capital Region, have remained consistent to ensure that the needs of the 5 regions are being met and that any resulting shortfalls are being absorbed by the Real Property and Service Integration Directorate. This results in the National Capital Region being administered differently than the other regions, even though they all perform the same functions. Furthermore, as per the Real Property and Service Integration Directorate management, the real property budget allocation algorithm has not undergone a fulsome review in over 5 years. Also, it does not take into consideration certain complexities particular to the National Capital Region, such as it serving 13 different branches and related management teams.

As well, while the priorities of the Real Property Program of providing accommodations and modernizing spaces to the CRA have not changed during the past 5 years, there has been a shift in operational activities from space reductions to growth. The initial focus on space reductions, which resulted in savings that would be transferred to one’s operating budget, was an incentive to achieve targets outlined in the various cost reduction exercises. Subsequently, activities changed with federal budget announcements related to CRA program growth. The audit team heard from the Real Property and Service Integration Directorate management that this was done without considering the full impacts on the Real Property Program processes, people, and clients and without the commensurate financial resources.

Because of the program’s lack of financial resources and its shifting activities, the Real Property and Service Integration Directorate is not entirely fulfilling certain functional authority and managerial responsibilities as expressed by various stakeholders. Most notably, only 1 of 2 real property service delivery models is perceived to be effective (see section 3.1.3).

Another key activity that is not being entirely fulfilled relates to the directorate’s recruitment and retention of non-executive staff. More than 50% of a sample of employees had less than 2 years of experience in their position. According to the Real Property and Service Integration Directorate, the typical learning curve for new employees with no prior real property experience is 1.5 to 2 years. Furthermore, an analysis of position occupancy over a 3-year period (from January 2016 to December 2018) confirmed that positions were occupied at a rate that does not meet Real Property and Service Integration Directorate’s human resources needs. The analysis also revealed that positions in the centres of expertise in the operating regions, excluding the National Capital Region, were occupied more of the time than positions in the directorate.

Also, while interviews with staff in the Real Property and Service Integration Directorate indicated that the directorate uses both diverse and common strategies to meet its human resources needs, the directorate faces numerous challenges that impact its ability to recruit and retain experienced staff:

The audit team heard from stakeholders, in particular Real Property and Service Integration Directorate’s management and employees that these challenges contribute to the high level of staff turnover in the directorate.

With respect to the other 5 operational regions, the Real Property and Service Integration Directorate provides these areas with limited training, operational procedures, and tools. Of note, staff are not required to take the mandatory real property/accommodation training and are generally only offered information sessions on topics upon their request to the directorate.

In summary, in the absence of sufficient financial resources, and experienced non-executive staff with proper training, operational procedures, and tools, the Real Property and Service Integration Directorate might not be able to effectively manage the Real Property Program.

Recommendation 4

The Finance and Administration Branch should evaluate the real property organizational and funding model to ensure that it is aligned with the operational activities of the Real Property Program.

Action Plan 4

The Finance and Administration Branch will assess the current organizational model in the Real Property and Service Integration Directorate for viability to deliver national level service standards and adjust, as required.

The Finance and Administration Branch will determine if changes to overall national real property function’s salary funding model is required. National real property funding will be reviewed periodically.

The target completion dates for this action plan are as follows:

 
ACTION DATE
Obtain temporary resources to address growing shortfalls to ensure the delivery of essential real property services March 2020
Assess the organizational model in the National Capital Region that currently includes Branch Liaison Officers for viability to deliver real property services June 2021
Assess the current organizational models in all operational regions for viability to deliver national service level standards December 2021
Adjust the current funding model in accordance with the organizational model, which is determined to be most viable to deliver on service level standards December 2021
Communicate the key roles and responsibilities of applicable stakeholders and implement the new organizational model March 2022

Recommendation 5

The Finance and Administration Branch should develop measures to improve the recruitment and retention of experienced non-executive staff, including developing and implementing real property/accommodation related training, operational procedures, and tools to support personnel.

Action Plan 5

The Finance and Administration Branch will conduct a review and develop and implement a training and learning framework and strategy that will ensure all parties involved in the delivery of real property services are appropriately trained and have the tools required to do their job. This review will also address the need for proper classification levels based on workloads and that strategies are in place to address recruitment and retention of employees in the directorate.

The target completion dates for this action plan are as follows:

 
ACTION DATE
Analyze issues impacting recruitment and retention of staff in the National Capital Region September 2020
Develop a human resources strategy to address findings of the analysis, including training for applicable stakeholders involved in the delivery of real property services March 2021
Implement the human resources strategy, including the training strategy March 2022

3.1.3 Only 1 of the 2 real property service delivery models is perceived to be effective and performance measurements are not in place.

The Real Property Program provides real property/accommodation services to clients across the CRA using 2 different service delivery models: the branch model that is used in the National Capital Region, and the regional model that is used in the other 5 operating regions. However, no performance measures exist in any of the 6 operating regions with respect to service delivery to CRA stakeholders by real property/accommodation personnel.

As part of the branch model, the National Capital Region Real Property Centre of Expertise and the Facilities Management Services Team of the Real Property and Service Integration Directorate provide real property/accommodation services through intermediaries called Branch Liaison Officers. When asked whether the branch model was effective in the interviewees’ opinion, 69% responded in the negative.

Of note, in the National Capital Region, the audit team heard from some branch Assistant Commissioners, Branch Liaison Officer managers, or Branch Liaison Officers that they felt the Real Property and Service Integration Directorate’s client service and project management are in need of improvements due to the following:

The Real Property and Service Integration Directorate acknowledged that it has communication and consultation gaps with branch senior management. These stem from the fact that services, including information, advice, and guidance, are provided by the Branch Liaison Officers, who are not real property/accommodation subject matter experts. In particular:

Also, because the Real Property and Service Integration Directorate provides no formal training to Branch Liaison Officers and the limited training that is provided is informal (for example, staff on strength exercise templates), Branch Liaison Officers are either unaware of or have a limited awareness of the procedures and tools that are available to support them. Similarly, branch personnel are also unaware of or have a limited awareness of the few operational procedures (such as client move packages) and tools (for example, the Request for Accommodation Form) that are available to support them.

While there is high turnover in non-executive staff in the Real Property and Service Integration Directorate (as noted in section 3.1.2), directorate contact information is available on the CRA’s intranet with those at the Director level remaining constant over the last 5 years. Moreover, the directorate expressed that branch personnel often opt to escalate issues to executive management levels rather than dealing with them more efficiently by contacting counterparts at the appropriate working level.

With respect to the regional model, a Real Property Centres of Expertise and Local Administration Teams provide real property/accommodation services in each region. When the audit team asked about the effectiveness of the regional model, 87% of interviewees (including regional Assistant Commissioners, Regional Directors, Finance and Administration management, and Real Property and Service Integration Directorate management) indicated that the model was effective for the following reasons:

As a result, while the CRA stakeholders implicated in the regional model feel they are receiving the expected level of real property/accommodation services, this is not the case for those in the National Capital Region. This problem with service delivery is further aggravated by the financial and human resources constraints (see section 3.1.2).

Recommendation 6

The Finance and Administration Branch should improve real property service delivery offered to clients by:

Furthermore, the Finance and Administration Branch should implement and communicate these changes to applicable CRA stakeholders.

Action Plan 6

The Finance and Administration Branch will initiate a communications strategy to address the gaps and misperceptions related to real property service delivery, including a client-centric engagement approach to develop national real property service level standards.

The target completion dates for this action plan follows:

 
ACTION DATE
Develop and initiate a communications strategy to address the gaps and misperceptions related to real property service delivery, including that of conflict of interest related to the Director General position of the Real Property and Service Integration Directorate June 2020
Develop a client-centric approach to determine national real property service-level standards, including performance measures June 2020
Develop a notionally costed national real property service level standards, including performance measures March 2021
Develop and propose options to CRA senior management of service delivery models and the costs associated with achieving these national real property service-level standards, including performance measures March 2021
Communicate, implement, monitor and assess the new service delivery models and service-level standards. March 2022

3.1.4 With the exception of CRA national real property committees, stakeholders’ roles and responsibilities are defined, documented, communicated, and adequately understood.

At the CRA, there are 5 national real property committees, who provide support to the Real Property Program.

Specifically, the Real Property Forum was formed in 2017 to include the Assistant Commissioners with a National Capital Region presence and expanded in 2018 as a national committee to include all Assistant Commissioners. The Forum is meant to serve as a senior level governance structure used to increase awareness, seek input on priorities and monitor progress on strategic aspects of the Real Property Program at the CRA. As this Forum was still in its early stages of its creation as a national committee during this audit, it is considered out of scope for this audit.

The National Investment Analysis Committee reviews, evaluates and recommends regional real property investment proposals/Investment Analysis Reports and related project resources to both the Strategic Investment Board Committee and the Real Property and Service Integration Directorate’s Directorate Management Committee based on their approval thresholds. The Strategic Investment Board Committee also annually reviews and approves the update of the CRA's Real Property Long-Term Accommodation Investment Plan. In addition, the Real Property Management Committee provides advice and guidance as well as performs other activities, such as reviewing governance instruments, to support the Real Property Program.

Refer to Appendix D for additional information on the national real property committees.

However, with respect to these committees, the audit team identified inaccuracies and inconsistencies in 3 of the 4 charters related to decision-making, membership, or support functions. Of particular note, the Real Property and Service Integration Directorate’s Directorate Management Committee Charter dated 2009, is a draft version, which might not be perceived as complete or containing up-to-date content. Moreover, 2 of the committees are not compliant with their own charters with respect to documentation of meeting agendas, minutes and records of decision.

Also, as per the Real Property and Service Integration Directorate, the committee charters had not been communicated to relevant CRA stakeholders, and the understanding of the charter by selected members and non-membersFootnote 5 varied by committee. More specifically:

The roles and responsibilities of stakeholdersFootnote 6, excluding those of the CRA national real property committees, are defined; documented; communicated; and aligned across CRA real property corporate policy instruments, procedures, and other materials. These stakeholders also have an adequate or greater understanding of their individual roles and responsibilities as well as those of other stakeholders.

In summary, in the absence of updated and communicated real property committee charters, stakeholders do not have a clear understanding of committees’ roles and responsibilities. This lack of understanding might result in committees not providing effective oversight when managing the Real Property Program or its related processes, especially those related to the approval of projects and funding.

Recommendation 7

The Finance and Administration Branch should update and finalize the CRA’s national real property committees’ charters to ensure that they are accurate and consistent, which should be communicated to applicable CRA stakeholders.

Also, the Finance and Administration Branch should document its meeting agendas as well as minutes and records of decision for compliance with the CRA’s national real property committee charters.

Action Plan 7

The Finance and Administration Branch will ensure that the Real Property and Service Integration Directorate updates the CRA’s national real property committee charters, including requirements for appropriate record keeping.

The Finance and Administration Branch commits that the Real Property and Service Integration Directorate will document national real property committee meeting agendas, minutes and records of decision for compliance with the CRA’s national real property committee charters.

The target completion dates for this action plan are as follows:

 
ACTION DATE
Document CRA’s national real property committee meeting agendas, minutes, and records of decision December 2019
Update and finalize the CRA’s national real property committees’ charters to ensure that they are accurate and consistent as well as reflect the current operating environment June 2020
Communicate updated charters to applicable CRA stakeholders September 2020

4. Conclusion

Overall, the CRA’s Real Property Program has the basic management framework and mechanisms in place to support its accountabilities and objectives as well as CRA and Board of Management priorities. However, opportunities exist to improve the program by:

5. Acknowledgements

In closing, we would like to acknowledge, recognize, and thank the Real Property and Service Integration Directorate of the Finance and Administration Branch for the time dedicated and the information provided during the course of this engagement. In addition, we would like acknowledge, recognize, and thank the Human Resources Branch for sharing its knowledge and expertise as well as for providing organizational data.

6. Appendices

Appendix A: Real property organization

The Real Property and Service Integration Directorate of the Finance and Administration Branch acts as the corporate owner of and investor for the real property portfolio. It is also the functional authority and national center of expertise for the Real Property Program, including the provision of accommodation services to the CRA. In essence, the directorate is responsible for ensuring that adequate real property resources are available to meet the CRA's accommodation needs, for allocating budgets, for managing the national governance framework and national strategic planning activities, as well as for advising nationally on accommodation solutions.

The Real Property and Service Integration Directorate’s objectives are to:

The directorate is led by the Director General, who reports to both the CRA Chief Financial Officer and Assistant Commissioner of the Finance and Administration Branch, and, as an employee of PSPC, to the Assistant Deputy Minister of the Real Property Branch in PSPC. The Director General, Real Property and Service Integration Directorate, is also known as the PSPC Senior Account Executive.

The Real Property and Service Integration Directorate is composed of 2 divisions: the National Real Property Stewardship Division and the National Real Property Solutions Division. The National Real Property Stewardship Division performs the corporate role in the development of the framework and strategic direction for the CRA Real Property Program. It is consistent with industry-best practices, CRA policies, broader government objectives, and applicable legislation while maximizing partnerships opportunities. It also has a liaison role with the other CRA Headquarters functions, CRA regions, PSPC, and other government departments and agencies with respect to governance and strategic planning issues. The division also coordinates national portfolio management, strategic planning, and investment activities.

The National Real Property Solutions Division is responsible for the day-to-day operations management as well as longer-term strategic planning for the National Capital Region. It also provides a leadership role to all regional Centres of Expertise on operational matters, such as property management and project delivery issues and has a role in a number of national files, such as health and safety. Through the National Capital Region Centre of Expertise, the division also implements approved projects and is responsible for regional planning activities and implementing national policies and accommodation fit-up standards.

As part of the branch service delivery model, the National Capital Region Centre of Expertise and the Facilities Management Services Team, both of the National Real Property Solutions Division, along with Branch Liaison Officers, are responsible for providing real property/accommodation services to 13 branches and related management teams.

In each of the other 5 operating regions (Ontario, Quebec, Atlantic, Prairies, and Pacific), the real property centres of expertise provide the same range of services as that of the National Capital Region. However, these centres of expertise report to their respective Regional Directors, who report to the Deputy Assistant Commissioner, and ultimately the Chief Financial Officer and Assistant Commissioner, all of the Finance and Administration Branch. They also report functionally to the Director General of the Real Property and Service Integration Directorate and are funded by the directorate.

The Local Administration Teams are also located, in varying numbers, in each of the operating regions, excluding the National Capital Region. They are composed of personnel, such as accommodation and telephony officers and clerks and accommodation, telephony, and security officers and clerks, who are responsible for the day-to-day operations management and who work in partnership with their respective Real Property Centre of Expertise. The team reports organizationally to the administration function in the region and functionally to the centre of expertise, both of which report to their respective Regional Director of the Finance and Administration Branch. They are also funded exclusively by the Real Property and Service Integration Directorate.

As part of the regional service delivery model, a Real Property Centre of Expertise and a combination of Local Administration Teams provide real property/accommodation services and support to the clients in each region.

Refer to Figure 1 for an organization chart of the real property organization.

Figure 1: Real property organizaion

Organizational chart for Real Property

Appendix B: Interviews

During the examination phase, the audit team interviewed the following stakeholders listed on the Table 2 below.

Table 2: Number of interviews and participants
Item # Stakeholders Total Number of Participants Total Number of Interviews
Notes
Notes 1

The Management Team includes the Director and their direct reports for each division in the directorate.

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Notes 2

This included 12 individual meetings with employees and 1 group meeting with 7 employees who do not belong to either the National Capital Region Real Property Centres of Expertise or the Facilities Management Services Team as they were interviewed as part of items #6 or #7 respectively. Also note that 2 of the 7 employees that participated in the group meeting were also interviewed individually.

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Notes 3

Participants included staff from 3 of the 6 real property operating regions, including the Atlantic and Ontario regions and the National Capital Region.

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Notes 4

Participants included a sample of Local Administration Teams from 2 of 5 real property operating regions, including the Atlantic and Ontario regions, and the Facilities Management Services Team from the National Capital Region.

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Notes 5

Participants included 9 branch Assistant Commissioners, excluding those from the Audit, Evaluation, and Risk Branch, Finance and Administration Branch, and Legal Services Branch, and 5 regional Assistant Commissioners.

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Notes 6

Participants represented 5 of the 9 branches selected.

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1 Chief Financial Officer and Assistant Commissioner, and Deputy Assistant Commissioner, Finance and Administration Branch 2 1
2 Executive Management, Real Property and Service Integration Directorate 3 3
3 Management Team Notes 1, Real Property and Service Integration Directorate 8 4
4 EmployeesNotes 2, Real Property and Service Integration Directorate 17 13
5 Regional Directors, Finance and Administration Branch 5 5
6 Real Property Centres of ExpertiseNotes 3 28 5
7 Local Administration Teams and the Facilities Management Services TeamNotes 4 37 8
8 Assistant CommissionersNotes 5 14 14
9 Branch Liaison OfficersNotes 6 6 6
10 Branch Liaison Officer managersNotes 6 8 4
  Total 128 63

In addition, the audit team interviewed senior management from the PSPC and 2 other government departments.

Appendix C: Approach, lines of enquiry, and methodology

The Audit, Evaluation, and Risk Branch conducted a risk assessment and considered other factors, such as findings from previous engagements, to identify the lines of enquiry in the table below. Given the size, complexity, and unique nature of the Real Property Program, and in order to allow for the timely communication of results, this audit will be carried out in 3 phases. Each phase has distinct lines of enquiry.

 
Phase # Lines of enquiry Criteria
Notes
Notes 1

Major tenant service project include major/complex moves, renovations, and reorganizations with expenditures of $100K or greater.

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Notes 2

Minor tenant service projects includes renovations, small scale moves, and reorganizations; as well as basic repairs with expenditures of less than $100K.Minor tenant service projects includes renovations, small scale moves, and reorganizations; as well as basic repairs with expenditures of less than $100K.

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I Program management The approach for managing the CRA’s real property authorities is beneficial to the organization.
The real property organization, including structure and model, has been fully articulated, approved, implemented, and is functioning as intended.
The roles and responsibilities of stakeholders, including committees, are defined, documented, communicated, and understood.
II Planning and service delivery The planning process is operating as intended, aligned with CRA and Board of Management priorities, and in accordance with real property policy instruments and the Real Property Service Agreement.
The service delivery process for major tenant service projectsNotes 1 is operating as intended and in accordance with real property policy instruments and the Real Property Service Agreement.
The service delivery process for minor tenant service projectsNotes 2 is operating as intended and in accordance with real property policy instruments and the Real Property Service Agreement.
Real property financial processes are operating as intended and in accordance with financial management and real property policy instruments as well as the Real Property Service Agreement.
III Monitoring and reporting Monitoring activities occur to ensure policies and procedures are working as intended and applied consistently.
Reporting provides accurate and relevant information to meet management needs and to support decision-making.
The performance management framework is operating as intended to measure the performance of PSPC as the service provider in accordance with the Real Property Service Agreement.

Methodology

Phase I methodology for examination included the following:

The outcomes of Phase I confirmed the need to proceed with Phase II: Planning and service delivery as well as Phase III: Monitoring and reporting. Both phases will be initiated at a later date that is yet to be determined. The following aspects will be addressed in the subsequent phases:

Appendix D: CRA national real property committees

 
Committees Mandate/Roles and Responsibilities
Notes
Notes 1

The mandate/roles and responsibilities for this committee do not comprise an exhaustive list and only reflect those directly related to the Real Property Program.

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Notes 2

As the Real Property Forum is still in the early stages of creation, it was considered out of scope for this audit and is only included for contextual purposes.

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National Investment Analysis Committee
  • To review and evaluate all real property investment proposals submitted to headquarters for approval by the Strategic Investment Board and the Real Property and Service Integration Directorate’s Directorate Management Committee.
  • To make recommendations to the Strategic Investment Board and the Real Property and Service Integration Directorate’s Directorate Management Committee related to the disposition of individual investment proposals.
Real Property and Service Integration Directorate’s Directorate Management CommitteeNotes 1
  • To provide leadership, vision and direction for the management of the national real property function in the CRA including:
    • reviewing and approving regional real property investment proposals/Investment Analysis Reports and related project resources for projects with planned total expenditures from $100,000 to $250,000 (exclusive of Agency functional and program costs).
Real Property ForumNotes 2 Mandate:
The Forum is meant to serve as a senior level governance structure used to increase awareness, seek input on priorities and monitor progress on strategic aspects of the Real Property Program at the CRA. This forum will enable pan-Agency discussions to take place taking into consideration financial and human impacts.
Responsibilities:
  • Provide guidance and recommendations to help set strategic direction of the Real Property Program
  • Be a sounding board for proposed changes to the real property corporate policy instruments that may have broader CRA implications (financial and human considerations)
  • Provide a forum for information sharing on emerging strategic real property matters from PSPC/central agencies
  • Oversight of the CRA’s real property portfolio
Real Property Management Committee
  • To provide advice and develop recommendations to the Real Property and Service Integration Directorate’s Directorate Management Committee on strategic direction and current/emerging issues and their implications on the delivery of the Real Property Program.
  • To develop new/or revised real property governance instruments and management processes.
  • To formulate and improve project management procedures, performance management, quality assurance, and risk management strategies and implement a framework for measurement of client satisfaction.
  • To share information and best practices on management of real property human, financial and materiel resources.
Strategic Investment Board Committee
  • To annually review and approve the update of the CRA's Real Property Long-term Accommodation Investment Plan.
  • To review and approve regional real property investment proposals/Investment Analysis Reports and related project resources for projects with planned total expenditures in excess of $250,000 (exclusive of Agency functional and program costs).

Appendix E: Glossary

 
Term Definition
Branch Liaison Officers Branch Liaison Officers are individuals who are appointed by their respective branch and perform a real property/accommodation intermediary function between the Real Property and Service Integration Directorate and their respective branches.
Local Administration Team Local Administration Teams are groups of personnel located in each region, excluding the National Capital Region, who are responsible for both accommodations and telephony activities.
Long-Term Accommodation Investment Plan The Long-term Accommodation Investment Plan is a 10-year plan that outlines a comprehensive and strategic approach to the stewardship of the CRA’s occupied space; it is updated annually and reported to the Board of Management.
Real Property Service Agreement The Real Property Service Agreement is a framework for an effective, performance-based business relationship between the CRA and PSPC that will allow the CRA to exercise its legislative authorities and facilitate the provision of real property services in support of the CRA’s program delivery.
Staff on Strength Exercise Number of employees, not full time equivalent, to be accommodated by a Responsibility Centre Manager at a certain point in time. This includes permanent, temporary and part-time employees, as well as the number of funded but unfilled positions.
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