Risk-Based Audit Framework

September 2002

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Table of Contents

Section 2. Roles, Responsibilities and Relationships

Section 1: Introduction

Purpose of the Risk-Based Audit Framework

The purpose of the Risk-Based Audit Framework (RBAF) is to describe the accountability and risk management environment in order to manage transfer payments in a manner sensitive to risks, complexity, accountability for results and economical use of resources.

The NCE RBAF has the following objectives which are to ensure that:

• Due diligence is exercised with regard to the expenditure of public funds.
• The program is administered in accordance with the Treasury Board terms and conditions of the contribution agreement and that recipients are selected and comply with the terms and conditions.
• Relevant legislation and policies (e.g. sections 32, 33, 34 of the Financial Administration Act and the Policy on Transfer Payments) are being respected.
• The quality of information available for use by the NCE program management is relevant, accurate and available for decision-making purposes.

Program Background

The NCE program is a federal program jointly managed by the three major granting agencies: the Natural Sciences and Engineering Research Council (NSERC), the Canadian Institutes of Health Research (CIHR) and the Social Sciences and Humanities Research Council (SSHRC) in partnership with Industry Canada (IC).

It is managed by the NCE Steering Committee, composed of the Presidents of the three granting agencies and the Deputy Minister of Industry Canada. Day to day administration is provided by the NCE Directorate made up of staff from the three granting agencies. The NCE program is hosted at NSERC.

Definition

A network is defined as a group funded under the Networks of Centres of Excellence program. The term award and/or grant is used as a synonym in this document.

Section 2: Roles, Responsibilities and Relationships

NCE Management is responsible for the day-to day management of ongoing financial and operational monitoring, compliance with terms and conditions, and reliability of results data. Other important activities include:

• Selection of networks
  Competitions are held regularly for renewal of existing Networks and for new Networks to be funded. All funding decisions are based on arm’s length peer-reviews of applications conducted by Expert Panels and Selection Committees.
• Monitoring and evaluation
  The monitoring of awards is an ongoing function of the NCE Directorate to ensure that NCE funds are used effectively to attain the expected results. These monitoring activities are linked to ongoing performance measurement and risk-assessment. The data collected in this context can also feed into periodic evaluations of the program every five years.

NSERC Internal Audit is responsible for the conduct of internal audits that provide assurance on the adequacy of risk management practices, management control frameworks and information used for decision-making for all its programs, including NCE.

A Tri-Agency Review and Investigations team is responsible for the conduct of periodic visits to Canadian universities and/or research centres, institutes, colleges and hospitals to ensure that appropriate and sound financial practices are in place at these institutions and that the Agencies’ guidelines are followed (CIHR’s Grants & Awards Guides, NSERC’s Researcher’s Guide and SSHRC’s Grant Holder’s Guide). The monitoring approach is consistent with the Tri-Agency Memorandum of Understanding.

Grantees of the Networks of Centres of Excellence (NCE) are also the subject of such review visits.

Networks are responsible for financial accountability and for management of the grant as well as the research program.

Section 3: Program Profile

Origin and Background

The Networks of Centres of Excellence (NCE) program was established as a pilot project in 1989 as part of the federal Science & Technology Strategy to better link research with wealth creation.

When the NCE program was initiated, it was somewhat controversial. There were two central features of the program?(1) the “distributed network model”; and (2) the focus on generating practical applications from fundamental research programs, working in concert with industry partners. At the time, no one knew if these features would add value, or indeed if they would work at all. The program was conceived as being experimental in nature, and individual networks took widely varying approaches to network management, research collaboration, and interactions with industry. There were virtually no other significant research programs in existence anywhere in the world that were similar to NCE¹. Since that time, the number of networks has expanded considerably (currently standing at 22), and those once-controversial aspects are now taken almost for granted. Where previously it was difficult to find network-type programs, now we have the Canadian Institutes of Health Research (CIHR). Where once it was considered potentially dangerous to link pure research too closely to industry, now the National Research Council encourages (or at least supports) its staff to create start-up companies to exploit NRC research findings. Where “sole-author” science was once considered the ultimate test of scientific strength, now there are programs that encourage national, international as well as intercontinental collaborations. Thus the NCE model is widely used in the global research community.

Deliverers and Co-deliverers

The NCE Secretariat hosted by NSERC is the main deliverer of the program with the assistance of the two other granting agencies: the Canadian Institutes of Health Research (CIHR) and the Social Sciences and Humanities Research Council (SSHRC) and Industry Canada.

Canadian universities themselves, as well as affiliated hospitals and research institutes, and some industry consortia, also invest significant resources for the development and maintenance of the Networks. They are network partners that provide cash and in-kind contributions to individual Networks. They are represented on Networks' Board of Directors and/or Research Management Committees and, in some cases, participate in Network research and training activities. As such, they are key players in delivering the Program.

Payment of Grants

Payment of grants is authorized by the NCE Steering Committee through one or more of the granting agencies. Subsequent installments are approved annually, subject to the availability of funds, satisfactory progress, and the network's continuing compliance with the program's policies, terms and conditions.

For networks administered through a university, funds are released to the designated financial administrative unit of the host university, following normal payment schedules for the granting agencies. The network advises the host university on the amounts to be disbursed to participating institutions.

For networks not administered through a university, funds are released monthly in arrears to the financial administration unit of the network that is responsible for the distribution of funds to participating institutions.

Resources

Reach

Primary targets

Primary targets are the individuals and organizations which the NCE Program aims to mobilize to achieve the expected results. University faculty whose research and students are supported with NCE funds, as well as public and private sector partners are the significant performers that are mobilised to ensure achievement of results.

Other stakeholders

Industries and organizations within the areas covered by NCE Networks are important stakeholders benefiting from the research results arising from the Networks. In many instances they are closely involved in commercializing new products, services or processes or in adopting new practices and policies, linked to NCE research. Globally, the NCE Program also bears the potential for impact on the development of entirely new industrial sectors in Canada. Parliament is another stakeholder given the significant role played by the NCE Program within its National Science and Technology Strategy as well as within the various activities of the Industry Canada portfolio. The Canadian public can also be considered as a stakeholder since the results are already known as having important impacts on the economy and on the quality of life of Canadians. Moreover, at the international level, many research results of the Program have impacted on the development of international standards, policies and regulations, thus affecting individuals and organizations outside Canada.

Goals and Objectives of the Program

The goal of the NCE program is to mobilize Canada's research talent in the academic, private and public sectors and apply it to the task of developing the economy and improving the quality of life of Canadians.

This NCE program goal is accomplished by investing in national research networks that meet the following objectives:

• Stimulate internationally competitive, leading-edge fundamental and applied research in areas critical to Canadian economic and social development;
• Develop and retain world-class researchers in areas essential to Canada's productivity and economic growth;
• Create nation-wide multidisciplinary and multisectorial research partnerships that integrate the research and development priorities of all participants; and
• Accelerate the exchange of research results within the network and the use of this knowledge within Canada by organizations that can harness it for Canadian economic and social development.

Governance Structure

The two bodies governing the NCE program are:

• The NCE Steering Committee, composed of the Presidents of the three granting agencies and the Deputy Minister of Industry Canada; and
• the NCE Management Committee, composed of Director Generals from the three granting agencies and Industry Canada, the Director of Policy and International Relations NSERC, and the Director of the NCE Program.

1. Even five years ago, it was uncommon to find non-Canadian scientists who had ever heard of the distributed network model.