Audit of the Management Control Framework (MCF)
Canadian Intellectual Property Office (CIPO)
Audit and Evaluation Branch
Industry Canada
March 2005
Executive Summary
1.1 Introduction
The Canadian Intellectual Property Office (CIPO), a Special Operating Agency of Industry Canada, administers Canada’s Intellectual Property (IP) systems comprising patents, trade-marks, copyrights, industrial designs and integrated circuit topographies. CIPO’s primary clients include: applicants for IP protection, agents representing applicants, users of IP systems and the Canadian business community. CIPO partners with provincial research councils, universities and other federal government agencies to build awareness of its products and services and increase the effective use of IP by Canadians.
In 2000, CIPO undertook a Baldrige Assessment. This systematic and independent examination of the organization, led to change initiatives to improve CIPO’s ability to define and address its business objectives and priorities.
The objective of the audit was to assess whether CIPO has an effective management control framework in place. The audit covered the management processes in place at CIPO - January - March 2005.
1.2 Overall Assessment
Overall, auditors found that the CIPO Management Control Framework (MCF) is adequate and effective. The MCF provides reasonable assurance that the organization is well positioned to manage risk and achieve stated objectives.
1.3 Main Findings, Conclusion and Recommendations
Auditors determined that CIPO is a highly citizen-focused organization, with a very well structured strategic and operational planning environment. Since 2000, CIPO has charted a path of continuous self-assessment and improvement and has implemented, or is in the process of implementing, all aspects of Treasury Board Secretariat’s (TBS) Management Accountability Framework (MAF).
1.3.1 Governance & Strategic Direction (See Section 3.1)
CIPO has a corporate management framework aligned to strategic outcomes; results-focused corporate priorities; a strategic resource allocation/reallocation process based on performance; an integrated agenda for management excellence; and a cyclical scanning of its environment (Domestic and International factors, including client satisfaction and relationships).
The annual strategic planning process includes a review and updating of the CIPO Business and Financial Plan, the Long-term Capital Plan and the Strategic Information Technology Plan. Human resource strategies are aligned with priorities defined in the Annual Business and Financial Plan, as are the allocation of Information Technology (IT) resources. The CIPO Executive Dashboard, produced monthly, supports the monitoring of performance on key priorities and indicators and the timely reallocation of resources, if necessary.
Conclusion
The essential conditions of governance and strategic direction are in place for providing effective strategic planning and support to the Minister and Parliament, as well as for the delivery of results.
1.3.2 Public Service Values (See Section 3.2)
CIPO senior managers continually reinforce the importance of values and ethics in the delivery of services and products. While CIPO has not developed a unique values and ethics program, the organization does operate in alignment with ethics and values policies of both the Government of Canada and Industry Canada. The adequacy or effectiveness of ethics and values activities, in a CIPO context, has not been evaluated to date.
Conclusion
The ethics and values policies that CIPO relies on reflect those used in many government departments and agencies. However, it may be that existing practices do not adequately address the risk of inappropriate use of information derived from business activities, such as the processing of Patent applications.
Recommendation
The CIPO CEO / Commissioner should ensure that an evaluation of the adequacy of the ethics and values program of CIPO be undertaken and, if necessary, a unique CIPO Values and Ethics Program should be developed and implemented.
1.3.3 Results and Performance (See Section 3.3)
The CIPO Executive Dashboard is produced for use by CIPO management. It integrates financial and non-financial performance information pertaining to Operations, Finance, Human Resources and client feedback. While some of the current performance measures support decision-making relevant to the achievement of the organization’s objectives, it is recognized that there is room for improvement (Follow-up to Baldrige Assessment 2004 – see Section 1.3.10). Performance is monitored against client expectations and is compared to other Intellectual Property (IP) Offices.
Conclusion
Relevant information on results is gathered and used to make departmental decisions. Public reporting is balanced, transparent, and easy to understand. The CIPO continuous innovation and transformation process and the annual strategic planning process provide opportunities for improvements in the definition, collection and use of results and performance information.
1.3.4 Policy and Programs (See Section 3.4)
IP policy responsibilities are divided between the Industry Canada Policy Sector and CIPO Corporate Strategies Branch (CSB). Industry Canada has the mandate to implement IP Policy, looking at the significant policy issues and changes. CSB focuses on a small group of technical policy changes resulting from court decisions and regulatory changes to definitions. CSB is also building expertise to allow it to undertake economic analysis and policy research projects. This expertise will enable CIPO to benchmark against other IP Offices, enter into joint projects with organizations and universities, better understand and influence innovation, and increase citizen engagement.
Conclusion
CIPO has, or is in the process of developing, a sustainable research and analytical capacity to provide a high level of quality assurance in the areas of developing policy options, designing programs, and providing advice to Ministers.
1.3.5 People (See Section 3.5)
Each CIPO Director acts as the champion for a specific Human Resource (HR) objective and is required to report to the CIPO Executive Committee on a quarterly basis. HR Champions have been established for the following functions:
- Employment Equity;
- Official Languages;
- Learning;
- Recruitment and Retention; and
- Workplace Well-Being.
The monthly CIPO Executive Dashboard provides statistics on performance against HR targets in each of the above categories. Models are used to determine operational resource requirements. The recruitment process includes a structured training program. There is an awareness of the HR issues facing CIPO at all organizational levels.
Conclusion
CIPO leaders demonstrate a commitment to maintaining a positive work environment, and a focus on building capacity and leadership to assure future success.
1.3.6 Citizen Focused Service (See Section 3.6)
CIPO is a client-driven organization. It has established organizational units with responsibilities for client communication and outreach programs; and works with its clients to monitor and continuously improve its service. CIPO uses the Internet to assist in delivering services, communicating with clients and obtaining client feedback. CIPO has introduced incentives for clients to submit applications in an electronic format.
CIPO works with both Canadian and international Intellectual Property organizations to promote services, improve quality, and achieve its mission.
Conclusion
CIPO has clearly addressed, and is committed to, all aspects of providing client-focused services.
1.3.7 Risk Management (See Section 3.7)
Operational and product line risks are formally addressed within the strategic and operational planning process. Risks that affect the delivery of services such as Patents and Trade-marks are monitored and analyzed. As required, mitigation strategies and activities are implemented. Corporate and horizontal risks are identified, discussed and addressed. However CIPO does not have an enterprise-level risk management system to clearly define the corporate context and the practices for proactively managing organizational and strategic risks.
To illustrate the above, the patent officer annual terminable allowance (bonus) of $5,138 to $12,216 is scheduled to end on September 30, 2005 and there is concern that it will not be renewed. While some discussions have taken place with respect to the impact to CIPO, there has been no formal and systematic approach to managing this potential risk to employee morale and to CIPO’s ability to achieve its Human Resources objectives.
Conclusion
There is evidence that risk is considered in strategic planning activities, and that key risks are identified and managed. CIPO could, however, improve corporate risk management, communication and coordination activities, thereby becoming more effective at identifying opportunities and minimizing negative outcomes.
Recommendation
The CIPO CEO / Commissioner should ensure a review and improvement of CIPO Corporate Risk Management strategies and practices.
1.3.8 Stewardship (See Section 3.8)
CIPO makes use of Industry Canada financial and Human Resources systems. Revenue information is captured in the CIPO Financial Integrated Transaction Tracking (FITT) system. Operational support systems feed data into management information systems that are used to track operational performance. Financial delegations are monitored and controlled. There is an awareness of policies, regulations and legislation.
The CIPO Finance Operations Unit verifies expenditures over $2000 against supporting documentation prior to approval for payment. Expenditures under $2000 are batched and are to be randomly reviewed after payment by Industry Canada . However, there is evidence that the transactions under $2000 are not being audited at present, and, within the CIPO Finance group, concerns were expressed with respect to the monitoring of credit card bulk payments.
CIPO has a Business Continuity Plan (BCP) in place. A BCP Coordinator is responsible for maintaining the plan and for ensuring that contact lists are up-to-date. The auditors found that the:
- BCP was being revised to make it easier to use, update and disseminate;
- BCP has not, as yet, been subjected to formal review or testing; and
- Disaster Recovery Plan (DRC), prepared by the Informatics Services Branch (ISB), was in the early stages of development.
Conclusion
Overall, CIPO’s control regime is integrated and effective and the underlying principles are clear to all staff. However, the lack of the oversight of financial transactions under $2000, as well as those processed in bulk, increases the risk that an inappropriate expenditure will go undetected. In addition, without a fully tested BCP, CIPO lacks the assurance that it can effectively continue critical business functions in the event of a critical incident.
Recommendations
The Director, Planning, Finance and Administration Branch, should ensure that expenditures of less than $2000 and credit card transactions processed in bulk are appropriately sampled and monitored.
The CIPO CEO/Commissioner should ensure that priority is given to establishing fully tested Business Continuity and Disaster Recovery Plans, and that such plans are kept up-to-date over time.
1.3.9 Accountability (See Section 3.9)
CIPO accountabilities and responsibilities for due process and results are well defined. Organizational units tend to have unity of objectives and product lines which facilitates the assignment of accountability for operational results and resources.
Performance and Management Accords contain cascading operational commitments. Commitments for other corporate and strategic priorities such as HR objectives are less well defined.
The committee structure reflects CIPO’s corporate priorities and objectives and the major components of its Integrated Strategic Framework. Many of the committees have been created recently and the mandates of existing committees have changed. At the time of the audit, Terms of Reference for various corporate committees were not available or, if they were available, require revision.
Conclusion
CIPO accountabilities for results are clearly assigned and are consistent with resources. Delegations are appropriate to capabilities. While adequate, the CIPO accountability framework could be improved to promote a greater common understanding and alignment of individual and corporate commitments by:
- Ensuring that current corporate Terms of Reference are in place that define:
- Membership;
- Authority, purpose;
- Scope and mandate;
- Frequency; and
- Expected results and time-frames.
- An integrated approach is taken to establishing Performance Accords with cascading strategic and operational commitments (such as HR priorities) for all employees; and
- Improving internal communication practices and processes.
Recommendation
The CIPO CEO / Commissioner should ensure that:
- Terms of Reference for Committees are current and are communicated across CIPO;
- The performance review process is revised to better address strategic priorities and objectives (at all levels); and
- Priority is given to an initiative to improve internal communications.
1.3.10 Learning, Innovation and Change Management (See Section 3.10)
In the year 2000, CIPO commenced a program of continuous improvement. A Baldrige Assessment was performed to provide a baseline of where CIPO was at this time against a standard (a detailed evaluation) and to provide recommendations (at a higher level) of actions to be undertaken. CIPO continues to use the Baldrige methodology to evaluate strengths and weaknesses, to measure progress in its transformation, and to develop or adjust action plans (Baldrige Follow-up Survey; October 2004).
Conclusion
CIPO manages in an open and transparent manner within an environment of continuous innovation and transformation, learning from its past performance.
The CIPO executive management team recognizes that it has made progress in establishing a culture of learning, innovation and change management. It also recognizes that there is still work to be done.
Recommendation
The CIPO CEO / Commissioner should ensure that CIPO continues to address the Baldrige Assessment recommendations and action plan.
Final Report (PDF - 282KB - 27 pages)
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Date Created: 2006-03-10
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