Industry Canada
Aboriginal Business Canada
Business Process and Monitoring
Final Report
January 2003
I. Executive Summary
The audit of the Business Process and Monitoring Process within the contribution programs of Aboriginal Business Canada (ABC) was carried out in accordance with the approved 2001-02 Internal Audit Plan. The objective of the audit was to assess the effectiveness of the controls over the Business and Monitoring Processes within ABC’s contribution programs. The audit scope included the Ontario, British Columbia and Atlantic Canada regions as determined through a separate risk assessment conducted in 2001 that identified Business Process and Monitoring as
the two highest risk areas within ABC. The audit was conducted in accordance with applicable auditing standards and included such tests as were considered necessary in the circumstances.
In general, controls are in place and are operating as intended within the Business Process area. The majority of projects examined were properly approved and in compliance with ABC policies and procedures, and all approved projects related to eligible costs within prescribed assistance limits and were clearly eligible under one of ABC’s four strategic priority areas. However, the effectiveness and efficiency of these controls could be further strengthened through improvements in documentation controls. Documentation control weaknesses noted included inconsistencies in the use of standard forms and documentation between the regions, a lack of supporting rationale for project risk assessments documented in the files, insufficient or poorly organized documentation supporting discussions with applicants to support the assessment of project viability, and a lack of clear guidance on the nature and timing of project reporting for monitoring purposes in the standard Letters of Offer.
The auditors were informed that many of these issues are currently being addressed by ABC management through cross-country training sessions that commenced in June 2002, through which a new Low Risk Project Screening Form and simplified environmental assessment procedures are being presented to improve consistency across all regions. In addition, more rigorous and comprehensive monitoring guidelines are under development which may lead to the inclusion of more detailed monitoring provisions in the Letters of Offer and which outline standard risk criteria against which projects are to be assessed.
Opportunities exist to strengthen many aspects of ABC’s monitoring activity. Overall, controls over progress claims for payment were found to be effective and operating as intended but may offer some opportunities for efficiency gains. Control weaknesses were also noted in some cases where payments had been approved despite the fact that certain conditions of the Letter of Offer had not been met. Further, opportunities exist to strengthen the controls over ABC’s project performance monitoring practices. In general, no operational or performance project monitoring is occurring. Although claims for payment are thoroughly verified, monitoring of project activities and progress against the project work plan and objectives does not occur on a regular and timely basis. Similarly, although evaluations of the program as a whole have been conducted, formal evaluations of the impacts of individual projects and the extent to which project objectives were achieved has not occurred on a regular basis. The extent of monitoring procedures required to be performed on projects does not vary based on the projects risk assessment, and may result in an inefficient and ineffective allocation of the project officer’s time. In addition, there has been little consideration given to the need to undertake audits of recipients of contributions.
ABC management is aware of the need to strengthen its monitoring activity, and is developing tools and guidelines to improve existing practices. A Monitoring Guideline and a Risk Assessment Guide has been drafted that provides guidelines and criteria to determine the scope and nature of monitoring activity to be conducted on projects, based on the project’s risk assessment. In addition, a Data Collection and Performance Indicator Framework has been drafted that identifies the key indicators that may be used for evaluation purposes. Further, four new Payment and Monitoring Officer positions are being staffed for the Toronto, Montreal, Winnipeg and Vancouver offices. These positions may provide a means to fill a quality control function within the Program.
On Feburary 8, 2005, Industry Canada's Departmental Audit and Evaluation Committee approved the follow-up of the Audit of ABC Business Process and Monitoring. Audit and Evaluation Branch is satisfied that all recommmendations have been addressed by responsible program management. Therefore, this audit is now considered as final.
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Date Created: 2004-01-05
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