Audit of Technology Partnerships Canada
Audit and Evaluation Branch
Audit Report
October 2003
Executive Summary
Technology Partnerships Canada (TPC) was formed in 1996 and is a Special Operating Agency of Industry Canada supporting directly Industry Canada’s key objectives. TPC is a technology investment fund established to contribute to Canada’s economic growth, jobs, wealth and sustainable development. Its purpose is to encourage private sector investments in an attempt to maintain and grow the technological capabilities and technology base in Canada. TPC invests in projects developing new technologies that, without TPC’s financial assistance, would not proceed within the desired scope, timing and location.
In 1998, TPC partnered with the Industrial Research Assistance Program (IRAP) of the National Research Council Canada (NRC) to support innovative small and medium enterprises (SMEs) by investing in projects in the pre-competitive or pre-commercialization stage. This distinct sub-program within TPC is known as the IRAP-TPC initiative.
The primary objectives of the audit were to assess: the adequacy of internal controls related to the selection, approval, payment and review of TPC and IRAP-TPC projects and operations; the propriety of transactions; the economy, efficiency and administrative effectiveness of contribution operations and delivery systems; and general compliance by recipients to terms and conditions of agreements, TPC Terms and Conditions and the adequacy of management efforts to determine compliance.
The audit found that, in general, controls related to the selection, approval, payment and review of TPC projects and operations are in place and operating effectively. Effective management practices noted included: the existence of an established approval process; a formal claims process; and the outsourcing of the repayment administration function. However, opportunities exist to strengthen aspects of the control framework in such areas as: strengthened project file documentation, the analysis of actual versus forecasted repayments; the classification of amendments and the prioritization of investment outlines in the Enabling and Environmental sectors. For IRAP-TPC, in general, controls related to the selection, approval, payment and review of projects and operations are also in place and operating effectively. Effective management practices noted included: the existence of an established approval process and the effective utilization of the repayment administration function. However, opportunities exist to strengthen project file documentation and ensure that technical advisors have the business backgrounds and/or business related experience needed to minimize the risk that items, of a critical financial nature, are not appropriately considered in the due diligence and monitoring processes. The audit did not find any instances of impropriety with the transactions tested.
In general, contribution operations and delivery systems are carried out with regard to economy, efficiency and administrative effectiveness. TPC and IRAP-TPC officials are taking steps towards improving key business processes. However, there are opportunities for improvement. In particular, the audit noted that documentation in a number of files was incomplete and/or non-standardized, especially surrounding due diligence. This increases the risk of TPC and IRAP-TPC not being able to demonstrate the level of due diligence performed on funding proposals and the rationale for decisions made. Further, TPC is constrained through its Terms and Conditions to limit program administration costs to 3% of total program funding. This has resulted in key positions not being staffed and increases the risk that program monitoring, delivery, management and administration are not as effective as they should be.
The audit did not note any significant instances of non-compliance by recipients to terms and conditions of agreements and TPC Terms and Conditions.
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Date Created: 2003-12-23
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