2.0 Approach and Methodology

BMCI followed the methodology prescribed by the Treasury Board and the IIA Standards for the Government of Canada. Consequently, the audit was conducted using the following phased approach:

Phase I: Planning and Survey

Preliminary Research and Planning
Preliminary Survey
Detailed Work Program

Phase II: Verification (Conduct)

Detailed Analysis
Compilation and Testing
Working Paper File Documentation
Register of Findings
Debriefing Sessions

Phase III: Reporting

Debriefing Sessions
Draft Report
Management Response
Final Report

Phase I: Planning and Survey

The universe for this audit was fiscal years 2002-03, 2003-04 and 2004-05 to September 2004 (approximately 30 months). It is important to note that the data BMCI received from WD to use for sampling purposes included expenditures of only approximately $158 million incurred during the 30-month period. If actual expenditures were used for 2002-03 and 2003-04, and an estimate made for the six months ended September 2004, the amount for expenditures would be approximately $560 million. This means that the data provided to BMCI represents only slightly more than 25% of actual expenditures for the period. In December 2004 and a number of times over the ensuing months BMCI questioned whether or not the listing of files was complete and requested Audit and Evaluation to investigate. When BMCI had the opportunity to raise this issue directly with Corporate Finance and Programs the missing data was promptly provided. BMCI is of the opinion that the data initially not provided does not materially impact the audit of procedures and processes but notes that all comments are related to the sample of $158 million in expenditures.

The scope of the universe was identified in terms of the numbers of transfer payments, by dollar value, by program and by region.
BMCI conducted a preliminary review of the management of transfer payments (grants, contributions and other transfer payments) at WD, including a review of Treasury Board Secretariat and Departmental policies and requirements related to transfer payments. This served to develop an understanding regarding the use of transfer payments. BMCI reviewed documented processes at Headquarters and in the British Columbia Region.
BMCI undertook a preliminary investigation to identify the management control framework for transfer payments as well as to identify potential other focus areas for the audit. Interviews were conducted with individuals in the Audit and Evaluation Branch, program and policy areas at Headquarters, and program and policy areas in the British Columbia Region. Individuals interviewed represented all levels from the working level to Assistant Deputy Ministers.
BMCI identified lists of those organizations that applied for a transfer payment in the time period indicated in the Scope section of this report. It is important to note that the lists were based on the original data representing $158 million in expenditures. This list was used to select some stakeholders who received a transfer payment and some who did not.

Phase II: Conduct and Analysis Phase

This phase of the audit was completed in June 2005.
BMCI designed tests based on the results of the Preliminary Survey phase. These included detailed file reviews, interviews, etc. and covered all regions. A judgemental sample of 80 projects (20 from each region) was selected representing a variety of WD programs. This sample was designed to enable overall conclusions on how the Department managed its grants, contributions and transfer payments programs. The sample was not intended to enable BMCI to draw conclusions on a specific WD program.
Interview guides were tested in the British Columbia Region and adjusted as necessary before continuing with the audit.
BMCI also interviewed a number of stakeholders.
BMCI conducted file reviews and interviews to verify the functioning of the management control framework.

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