ARCHIVED - Audit of the Growing Forward Program Initiatives Development Memorandum of Understanding

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March 2012

Table of Contents

1.0 Executive Summary

1.1 Introduction

The Growing Forward Program Initiatives Development Memorandum of Understanding (MOU) is an agreement between Agriculture and Agri-food Canada (AAFC) and the Canadian Food Inspection Agency (CFIA or the Agency) for delivery of CFIA's initiatives under the Canadian Integrated Food Safety Initiative (CIFSI). The MOU covers the period April 1, 2009 to March 31, 2013 and includes $20.9M in funding. Programming delivered by CFIA includes:

  1. CFIA System Recognition and Scientific and Technical Support;
  2. National Biosecurity Standards Development;
  3. Traceability Information Sharing Solution; and,
  4. Legislative and Regulatory Infrastructure.

This audit was performed at the request of the Policy and Programs Branch (PPB), in accordance with the requirement in Clause 10.1 of the MOU to conduct a compliance audit for fiscal year 2010-11.

1.2 Audit Objective

The objective of this audit was to provide assurance that CFIA is in compliance with the terms and conditions of the Growing Forward Program Initiatives Development MOU between AAFC and CFIA. The audit assessed the extent to which CFIA has controls in place to ensure compliance with the MOU, including:

  1. Controls for the administration of the initiative that are adequate and operating effectively;
  2. Financial controls for implementation of the MOU that are adequate and operating effectively; and
  3. Reporting systems that are adequate, and provide information that is accurate and reliable to support decision making and meeting the requirements of the MOU.

1.3 Audit Scope

The scope of this audit was the period April 1, 2010 to March 31, 2011, in accordance with the requirements of the MOU. The scope of the audit included CFIA requirements under the MOU relating to administrative, financial and reporting controls, and focused on three of the four initiatives covered under the MOU:

  1. CFIA System Recognition and Scientific and Technical Support;
  2. National Biosecurity Standards Development; and
  3. Traceability Management Office Legislative and Regulatory Infrastructure.

The fourth initiative, the Traceability Information Sharing Solution initiative was funded in fiscal year 2009-10 under the MOU, and was not included in the scope of the audit.

1.4 Main Findings and Recommendations

For each of the three initiatives, administrative, financial and reporting controls are generally in place. Two areas of non-compliance with respect to specific clauses of the MOU were noted:

1.4.1 Performance Measurement and Evaluation Strategy

A comprehensive performance measurement and evaluation strategy for the initiative has not been put in place, as required by clause 11.1 of the MOU.

Recommendation 1.0:

The Vice President, Policy and Programs Branch should ensure that a comprehensive performance measurement and evaluation strategy is developed and approved, in accordance with clause 11.1 of the MOU.

1.4.2 Reporting Requirements

CFIA has provided AAFC with semi-annual and annual performance reports required under the MOU. However, the reports were not provided within the dates specified in clauses 9.3.1 and 9.3.2 of the MOU.

Recommendation 2.0:

The Vice President, Policy and Programs Branch should take action to ensure compliance with clauses 9.3.1 and 9.3.2 of the MOU.

1.5 Statement of Assurance

In my professional judgment as Chief Audit Executive, sufficient and appropriate audit procedures have been conducted and evidence gathered to support the accuracy of the opinion provided and contained in this report. The opinion is based on a comparison of the conditions, as they existed at the time, against pre-established audit criteria. The opinion is applicable only to the entities examined and within the scope described herein.

1.6 Audit Opinion1

In my opinion CFIA is generally in compliance with the terms and conditions of the Growing Forward Program Initiatives Development MOU between AAFC and CFIA except for clauses 9.3 and 11.1 of the MOU.

Brian Smith
A/Chief Audit Executive, CFIA

2.0 About the Audit

2.1 Background

The Growing Forward (GF) Program Initiatives Development Memorandum of Understanding (MOU) identifies the working relationships, performance indicators, and reporting structures established between Agriculture and Agri-food Canada (AAFC) and the Canadian Food Inspection Agency (CFIA or the Agency) for delivery of CFIA's initiatives under the Canadian Integrated Food Safety Initiative (CIFSI). The MOU covers the period April 1, 2009 to March 31, 2013 and includes $20.9M in funding. The following four (4) components of the CIFSI are funded by AAFC and delivered by CFIA:

  1. CFIA System Recognition and Scientific and Technical Support element under the National Food Safety Systems component of the CIFSI;
  2. National Biosecurity Standards Development;
  3. Traceability Information Sharing Solution element under the Developing National Traceability Systems component of the CIFSI; and,
  4. Traceability Management Office Legislative and Regulatory Infrastructure element under the Developing National Traceability Systems component of the CIFSI.
Authorized funding amounts for CFIA for each initiative for the 2009-10 and 2010-11 fiscal years are as follows:
Program Initiative Total Funding2 (4-years) 2009-10 2010-11
CFIA System Recognition and Scientific and Technical Support $7.3 $2.1 $2.1
National Biosecurity Standards Development $9.5 $2.2 $2.0
Traceability Information Sharing Solution $1.1 $1.1 $0.0
Traceability Management Office Legislative and Regulatory Infrastructure $3.0 $0.4 $0.9
Totals $20.9 $5.8 $5.0

This audit was performed at the request of the Policy and Programs Branch (PPB), in accordance with the requirement in Clause 10.1 of the MOU to conduct a Compliance Audit for fiscal year 2010-11.

2.2 Objective

The objective of this audit was to provide assurance that CFIA is in compliance with the terms and conditions of the Growing Forward Program Initiatives Development MOU between AAFC and CFIA. The audit assessed the extent to which CFIA had controls in place to ensure compliance with the MOU, including:

  1. Controls for the administration of the initiative that are adequate and operating effectively;
  2. Financial controls3 for implementation of the MOU that are adequate and operating effectively; and
  3. Reporting systems that are adequate, and provide information that is accurate and reliable to support decision making and meeting the requirements of the MOU.

2.3 Scope

The scope of this audit covered the period April 1, 2010 to March 31, 2011, in accordance with the requirements of the MOU. The scope included CFIA requirements under the MOU relating to administrative, financial and reporting controls, and focused on three of the four initiatives covered under the MOU:

  1. CFIA System Recognition and Scientific and Technical Support;
  2. National Biosecurity Standards Development; and
  3. Traceability Management Office Legislative and Regulatory Infrastructure.

The fourth initiative, the Traceability Information Sharing Solution initiative was funded in fiscal year 2009-10 under the MOU, and was not included the scope of the audit.

In accordance with clause 10.1 of the MOU, CFIA consulted with, and obtained AAFC agreement on the scope of this audit.

2.4 Methodology

Audit criteria identify the standards against which an assessment is made, clarify the audit objectives, and form a basis for the work plan and conduct of the audit. Audit criteria were drawn from Audit Criteria related to the Management Accountability Framework: A Tool for Internal Auditors4 (MAF), and the terms and conditions of the Growing Forward MOU. Specific requirements in the MOU were linked directly to the relevant MAF control criteria to develop the audit criteria and sub-criteria. A list of audit criteria is included in Appendix A.

The following audit approaches were applied during the conduct of the audit to ensure the collection of sufficient and appropriate audit evidence:

  • Interviews with GF program managers and other staff members;
  • Reviewing and analyzing GF program documents /data;
  • Re-performance of calculations;
  • Judgmental sampling of invoices;
  • Tracing of balances (Management Report to Enterprise reports from SAP);
  • Recording of observations and findings; and
  • Conclusion on observations with regard to audit criteria.

Audit planning was initiated in October 2011. Audit fieldwork began in November 2011, and was completed in January 2012.

3.0 Findings and Recommendations

For each of the three initiatives, it was found that administrative, financial and reporting controls are generally in place. Two areas of non-compliance with respect to specific clauses of the MOU were noted.

3.1 Administrative

Administrative controls are generally in place for the fiscal year 2010-11; however, a comprehensive performance measurement and evaluation strategy for the initiative has not been put in place, as required by clause 11.1 of the MOU.

An effective oversight body with clear roles and responsibilities has been established for each initiative under the Growing Forward MOU. Operational plans and workplans to achieve each initiative's objectives are in place. Decisions to transfer resources between years and priorities are documented and have received the appropriate level of approval. CFIA management at the Executive Director level reviews progress on a regular basis. Management has implemented the planned MOU Audit.

The MOU requires that CFIA would have in place a comprehensive performance measurement and evaluation strategy for the initiative as required by clause 11.1 of the MOU.

A comprehensive performance measurement and evaluation strategy, which includes a logic model for the programming covered by the MOU, has not been developed.

As a result, there is a risk that the Agency will not have comprehensive information for the activities under the MOU.

Clause 11.1 of the MOU requires an evaluation be completed by the end of 2012-13. The absence of the performance measurement and evaluation strategy could have a negative impact on the ability of the Agency to perform the evaluation on a timely basis.

Recommendation 1.0:

The Vice President, Policy and Programs Branch should ensure that a comprehensive performance measurement and evaluation strategy is developed and approved, in accordance with clause 11.1 of the MOU.

3.2 Financial

Financial controls tested were found to be in place for the fiscal year 2010-11.

Budgets are established for the Growing Forward initiative and actual expenditures are monitored by management. Management is monitoring actual financial performance against planned results, and adjustments are being made as required. Financial forecasts and expenditures are reviewed by management on a regular basis, and performance reports include information on actual expenditures. Expenditures claimed against the Growing Forward Fund are supported by authorized invoices or other supporting evidence, were incurred during 2010-11 and reasonably fall within the category of expenditures covered by the agreement.

3.3 Reporting

Reporting controls were found to be generally in place for fiscal year 2010-11. CFIA has provided AAFC with semi-annual and annual performance reports required under the MOU. However, the reports were not provided within the dates specified in clauses 9.3.1 and 9.3.2 of the MOU.

Semi-annual and annual performance reports, including the performance indicators and targets as set out in Annex E of the Growing Forward MOU, were provided to AAFC.

For fiscal year 2010-2011, the performance reports were not provided within the dates specified in Clauses 9.3.1 and 9.3.2 of the MOU: November 15 (2010) for the semi-annual report and May 15 (2011) for the annual report. Management has indicated that the reporting deadlines are difficult to meet due to the time required to accumulate the performance and financial information and intends to address this issue with AAFC.

In addition, clause 5.2.5 of the MOU requires an assertion, from an appropriate level of delegated CFIA official, that funds have been spent in direct support of initiatives described in the MOU; and clause 9.2.6 of the MOU requires the performance reports to include planned spending for the CIFSI for the upcoming year.  The 2010-2011 performance reports did not include this information. Management has since up-dated the reporting templates to include both the required assertion and planned spending for the up-coming year, to meet compliance requirements.

Recommendation 2.0:

The Vice President, Policy and Programs Branch should take action to ensure compliance with clauses 9.3.1 and 9.3.2 of the MOU.

Appendix A: Audit Criteria

Administrative

GSD-25 An effective oversight body with clear roles and responsibilities has been established for each initiative under the Growing Forward MOU.

  • There is a governance structure with individual's assigned responsibility for each of the initiatives. (7.2)6
  • There are regular structured meetings between the two organizations.

GSD-4 The organization has in place operational plans and objectives aimed at achieving the initiative's objectives.

  • AAFC was provided with an approved work plan covering the period starting April 1, 2009 and ending March 31, 2013 (5.2.1)
  • Costed work plans with milestones, targets and indicators have been prepared and approved. (7.3.2)

RP-1 Management has identified planned results linked to organizational objectives

  • A comprehensive performance measurement and evaluation strategy, which includes a logic model for the programming covered by the MOU, was developed and approved by Participants by March 2010 (11.0).

RP-2 Management has identified appropriate performance measures linked to planned results.

  • Performance reports required under clause 5.2.3 include (9.2):
    • 9.2.1 Performance indicators set out in Annex E (Performance Reporting Template).
    • 9.2.2 Performance targets set out in Annex E (Performance Reporting Template).

RP-3 Management monitors actual performance against planned results and adjusts course as needed.

  • Regular reports on results and achievements are prepared for senior management review (7.3.5).
  • A formal recommendation for transfer of funding in subsequent year is prepared for senior approval (7.3.6).
  • Performance reports required under clause 5.2.3 to include (9.2):
    • 9.2.3 Results achieved for CIFSI in the fiscal year.
    • 9.2.4 Planned results for CIFSI for the upcoming year.

LICM-2 The organization has processes and practices to ensure change initiatives are properly implemented.

  • Decisions regarding transfer within and between years and/or priorities are made by designated officials (Deputy Minister and President) (6.5).
  • In communications related to this MOU the Growing Forward (GF) graphic standard is applied; in all other communications related to this MOU, the Participants to this MOU are identified equally (8.2).

RM-7 Planning and resource allocations consider risk information.

  • CFIA work plans for each of the initiatives are up-dated on an annual basis (5.2.2).
  • Timely evaluations and compliance audits are performed; performance data is accumulated (5.2.7).

Financial

RM-3 Management identifies and assesses the existing controls which are in place to manage its risks.

  • Financial controls for the preparation of performance reports are in place (6.2).

ST-4 Financial forecasts are monitored on a regular basis.

  • Cash flow forecasts and expenditures are reviewed by delegated officials (7.3.4).
  • Performance reports required under clause 5.2.3 to include (9.2):
    • 9.2.5 Actual spending for CIFSI within the fiscal year.
    • 9.2.6 Planned spending for CIFSI for the upcoming year.

ST-15 Reviews are conducted to analyze, compare and explain financial variances between actual and plan.

  • Progress reports on implementation of initiatives are provided to AAFC (5.2.3).
  • Monthly reports on status of technical reviews and by phase of review process are provided to AAFC (5.2.4).
  • Performance reports required under clause 5.2.3 to include (9.2):
    • 9.2.7 Comments on any variances between planned spending and actual spending, and planned results and results achieved.

Reporting

ST-18 Financial and non-financial reporting is reviewed and approved.

  • Delegated officials review results to assess progress on outputs and outcomes (7.3.3).

ST-20 Appropriate and timely financial and non-financial reporting is communicated internally and externally.

  • An assertion that funds have been spent in direct support of initiatives described in the MOU has been provided to AAFC (5.2.5).
  • Information on changes to the objectives of this MOU has been provided to AAFC (5.2.6).
  • For each fiscal year, CFIA will prepare and provide to AAFC (9.3):
    • 9.3.1 Semi-annual Performance Report (by November 15)
    • 9.3.2 Annual Performance Report (by May 15)
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