Audit of the SchoolNet Family of Programs
Audit and Evaluation Branch
Industry Canada
January 2005
Executive Summary
The objectives of the audit of the SchoolNet program were to provide an independent and objective assessment of: the adequacy of SchoolNet’s management control framework and practices, including its risk management strategies and practices and information used for decision-making and reporting purposes; the adequacy of internal controls; the economy, efficiency and administrative effectiveness of contribution operations and delivery systems; and compliance with Treasury Board’s Policy on Transfer Payments, general terms and conditions of agreements, and the adequacy of efforts to determine compliance. The scope of the audit was limited to the First Nations SchoolNet (FNS), Computers for Schools (CFS) and GrassRoots (GR) programs based on a risk assessment conducted in February 2004. The audit focused on management practices and contribution agreements in effect between January 2003 and March 2004.
The scope of the audit was modified at the inception of the audit field work due to program changes resulting from the 2004/05 federal budget, resulting in the elimination of further audit work on the GR program and expanded field work on the FNS program. The audit was conducted in accordance with the Institute of Internal Auditors’ Standards of the Professional Practice of Internal Auditing and Treasury Board’s Policy on Internal Audit.
The results of the audit are intended to be used by SchoolNet management to improve existing management practices, controls, processes and procedures in its various program areas.
Background
The SchoolNet family of programs relies heavily upon partnerships and third party delivery arrangements to achieve programming objectives. As a result, two of the key risks facing the program are the indirect control exercised by the program as a result of the use of third party delivery agents and reliance on partnerships to achieve its objectives. In addition, SchoolNet programs have faced a considerable amount of change over the past three years, primarily due to changes in funding and a restructuring within the Information Highway Applications Branch in response to findings identified in the September 2000 internal audit.
A summary of the programs subject to the audit is as follows:
- First Nations SchoolNet – Through contribution agreements with six Regional Management Organizations (RMO’s), FNS programming is delivered on a national basis to connect and maintain the connections of First Nation schools to the Internet and to accelerate the development of stronger communities, people and economies.
- Computers for Schools – CFS is delivered by not for profit organizations within each province of Canada through the provision of refurbished computers to schools throughout the country.
- GrassRoots – Through the GR program, contributions are made towards the development of innovative multimedia online learning projects to encourage the use of and develop skills in Internet and multimedia technologies.
Conclusions and Key Findings
Overall, we found that SchoolNet’s management control framework and related practices and internal controls are in place, operating as intended, and are in compliance with Treasury Board’s Policy on Transfer Payments. The SchoolNet family of programs has implemented a number of noteworthy and leading practices, including the programs’ successful use of partnerships to leverage additional support for program delivery, the use of a collaborative approach in the development of programming objectives and priorities, the high level of commitment among staff and management, and the frequency and form of communications between program staff and management and its recipients. Many of the better practices currently employed by the SchoolNet programs examined are provided in Appendix D.
In addition, through the course of our audit, we identified potential opportunities for further improvement that have been summarized below by audit objective.
1) Management Control Framework and Practices
Because partnerships are a critical success factor in SchoolNet program delivery, it is recommended that a formal framework be developed to provide guiding principles over the selection and management of partnership arrangements, both within programs and between IHAB programs. Such a framework should include standard partnership agreements, clear roles and responsibilities, the development of a national partnership database, and supporting policies and processes. A formal framework may improve opportunities to share lessons learned and leverage off existing partnerships on a national level. In addition, the development of formal agreements between recipient organizations and local partners may reduce risks associated with varying levels of partner support.
Due to a significant amount of turnover at the Program Officer level and Branch restructuring that has resulted in modified roles and responsibilities, additional training in the processing and monitoring of contribution agreements is recommended at the Program Officer level. Prior to the development of specific training plans, Program Officer roles and responsibilities should be reexamined, and consideration be given to expanding roles and responsibilities to allow for the assignment of a specific officer for each recipient organization for monitoring, financial verification, and other activities. Once roles and responsibilities have been finalized, gaps in individual capabilities should be assessed and training plans developed for all personnel at the Officer level.
Finally, existing information and reporting provided to management require improvements in content and timeliness. It is recommended that management identify potential changes in the data collection required in order to provide for more timely and detailed reporting to better meet their needs. It is further recommended that the development of a national FNS database be considered a priority.
This database should be a key source of information in demonstrating program performance and the achievement of program objectives and intended outcomes.
2) Internal Controls
Although recipient monitoring activities are currently performed in a variety of forms, evidence of monitoring activities is not currently documented in sufficient clarity or detail. This may create difficulties in determining the current progress of a recipient and in identifying issues and the status of any resolutions. It is recommended that file documentation standards be revised to require an appropriate and specific level of documentation as evidence of monitoring activities, such as a sign off on recipient activity reports and provision of commentary on reports received and meetings attended.
3) Contribution Operations and Delivery Systems
A number of opportunities for improvement in the efficiency of the current claims verification process exist, including: the adoption of a more risk-based approach to claims verification through which a selected portion of supporting documentation would be examined based on risk; increased training for recipients on reporting requirements to reduce systemic and recurring errors; a more rigorous follow up on the reasonableness of cash flow forecasts by recipients in support of advances to reduce the programs’ exposure to risk; and a reduction in the amount of paperwork required for each claim. By focusing on these improvements, the claims processing time may be reduced and the administrative burden on recipients may be lessened.
It is further recommended that standard templates be developed for the FNS program, similar to those currently used by CFS, to be submitted on a quarterly basis and allow for less formal activity reporting in support of monthly claims. Standard quarterly recipient reporting should include status, outcomes and action plans against specific performance measures and business plan objectives.
4) Compliance
In some instances, specific provisions required under the RMO contribution agreements were not included in contracts between the First Nations Schools and the recipient organization. It is recommended that a standard contract be developed by FNS management, in consultation with Legal Services, and included as an appendix to the standard RMO contribution agreement. It is our understanding that this issue was resolved in early fiscal 2004/2005 through the development of agreements between RMOs and First Nations Schools that meet all the requirements of the RMO contribution agreements.
SchoolNet management has accepted all findings, conclusions and recommendations of this audit report. The detailed management responses for each of the recommendations raised can be found in Appendix A of this report. As demonstrated in Appendix A, SchoolNet management has clearly identified an action plan, including key areas of responsibility and anticipated time lines, to address each recommendation, many of which are currently underway or have been completed.
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Date Created: 2005-03-08
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