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Office of the Auditor General’s Special Examination report
21 February 2005
CDIC recently underwent a Special Examination of its systems and practices as required by the Financial Administration Act. The Office of the Auditor General must conduct a Special Examination of most Crown corporations at least once every five years. The Auditor General's report was presented to the CDIC Board of Directors on December 1, 2004.
In order to proceed with the Special Examination, a plan for the examination as well as a statement of the criteria to be applied in the examination were prepared by the Office of the Auditor General and submitted to the CDIC Audit Committee (the examination criteria can be viewed at Appendix A of the report). It is on the basis of an examination of CDIC's systems and practices that the Office of the Auditor General determined that "during the period under examination, the systems and practices of CDIC were designed and operated in a way that provided reasonable assurance that assets were safeguarded and controlled, resources managed economically and efficiently, and operations carried out effectively."
The report notes principally that CDIC:
- has in place the key elements of a good governance framework (paragraph 34);
- takes timely and appropriate action to address identified risks (paragraph 46);
- has an experienced management team (paragraph 76);
- has taken steps to reduce the regulatory burden on its members (paragraph 82);
- maintains systems and practices for providing timely, accurate information to the depositing public (paragraph 86); and
- has strong accountability reporting (paragraph 109).
- Assessing the readiness to deal with future interventions of all key parts of the organization, by member institution peer group
Since 2003, the Operational Readiness Group (ORG) has been in place to coordinate readiness activities across CDIC. The current financial system in Canada is strong; nonetheless, previous experience suggests that, from time to time, individual member institutions will face viability or solvency problems requiring intervention by CDIC. The timing and circumstances of such events are difficult and often impossible to predict with great certainty. CDIC's strategy is to be prepared and ready to meet any eventuality within its mandate. The ORG has already coordinated simulations and research in various intervention areas, and continues to do so. Going forward, the results of the simulations and research will feed into the assessment of readiness by member institution peer groups. These assessments will help prioritize work to be done in various areas of CDIC to enhance readiness. - Finalizing key documents on the processes and systems for intervention and payout
Some documents will be finalized through simulations of intervention and payout systems planned for this fiscal year. Over the remaining 2004/05 period, other key documentation for interventions and payouts will be reviewed to identify what procedures, including those related to simulations and testing, should be put into place. - Updating and documenting the valuation model used in assessing various intervention methods
In 2003/2004, CDIC began work on improvements to its valuation model (which is a software program designed to assist CDIC in its intervention work). Upgrading is now in progress and will be completed by March 31, 2005. - Addressing the concerns about the timing, content and clarity of enterprise risk management (ERM) reports
A new reporting format has been put in place, and the timing of the ERM rollout has been accelerated by one year to March 2006.
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