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[April 14, 2010]
Today, Acting Auditor General of Alberta, Merwan Saher, CA, arranged for the Report of the Auditor General of Alberta—April 2010 to be made public. The report contains 44 recommendations.
Here are the highlights of the new audit work:
- Alberta Schools Alternative Procurement (Treasury Board, Infrastructure and Education)—page 19
- What we found—In June 2007, the Minister of Education announced that 18 new schools would be constructed using a Public Private Partnership model. The systems used by government supported the decision to award the P3 contract—also known as a Design Build Finance Maintain contract. The contract was awarded to the consortium with the lowest bid, risk was allocated appropriately, and the process was fair and open. Some aspects of the systems can be improved.
- What we recommend—Treasury Board and Infrastructure need to improve processes, including sensitivity analysis, to challenge and support maintenance costs and risk valuations (Rec. No. 1). They also need to publish a report to inform Albertans how value for money was achieved (Rec. No. 2).
- Why it's important—Albertans need to know if the processes the government uses to assess P3 opportunities demonstrate value for money to build and maintain the province’s capital property over the long term.
- Occupational Health and Safety (Employment and Immigration)—page 31
- What we found—The Department needs to improve its systems to promote, monitor, enforce and report on Occupational Health and Safety. A small but high risk group of employers consistently fail to comply with OHS orders and have disabling injury rates that are higher than the provincial average. The Department does not have a clear decision ladder for escalating compliance action from promotion and education to enforcement.
- What we recommend—The Department needs to enforce compliance with the Occupational Health and Safety Act by employers who persistently fail to comply (Rec. No. 3). We also recommend that the Department improve its systems for planning and reporting on OHS goals and objectives, conducting inspections, and issuing permits and certificates.
- Why it's important—Virtually all occupational injuries, diseases and fatalities are preventable. The impact of workplace injuries, illnesses and fatalities reaches well beyond workers and their families and leads to broader negative economic and social consequences.
- Managing Alberta’s Water Supply (Environment)—page 53
Our audit covered capital management and planning, Water Act regulatory activities, and integration. We did not audit monitoring and reporting, and partnerships.
- What we found—The Department has systems to manage Alberta’s water supply businesses, but they need to re-engineer many of them to ensure they operate efficiently and effectively.
- What we recommend—the Department needs to:
- minimize the backlog of outstanding applications for Water Act licences and approvals (Rec. No. 4)
- ensure its controls provide adequate assurance that licence and approval holders comply with the Water Act (Rec. No. 5)
- formalize its wetland compensation relationships and control procedures (Rec. No. 6)
- strengthen its control of grants and contracts with Watershed Planning and Advisory Councils (Rec. No. 7).
- Why it's important—Alberta owns the province’s surface and sub-surface water resources. Water supply management is critical to Alberta’s continued growth. It also plays a key role in maintaining human health and environmental integrity.
- ATB—New Banking System Implementation (Finance and Enterprise)—page 81
- What we found—ATB is replacing its aging systems with new banking and accounting systems; this is known as the Core Project. Ineffective project governance and management for ATB’s Core project have caused significant project delays and escalating costs. The Core project is significantly over budget and behind schedule. The root causes of delay and cost increases should have been identified and dealt with much earlier.
- What we recommend—ATB needs to develop a new project plan (Rec. No. 8); put in place new project controls (Rec. No. 9); conduct reviews of its Core project at clearly identified checkpoints to ensure there is agreement for the project to continue (Rec. No. 10); and provide the Board with better information (Rec. No. 11).
- Why it's important—The project to re-engineer ATB’s main business processes of lending and deposit taking should be delivered on time and on budget given the significant capital investment.
- Oversight of Financial Institutions (Finance and Enterprise)—page 89
- What we found
- The Department has developed a reasonable supervisory approach to monitor the safety and soundness of regulated entities. But there isn’t an implementation plan so it’s not clear how or when the Department will meet its objectives.
- The Department cannot demonstrate that ATB meets the government’s expectations.
- What we recommend—The Department needs to clarify its business objectives for ATB in relation to the level of risk it expects ATB to take (Rec. No. 12), needs to develop an implementation plan for its approach to supervising regulated financial institutions (Rec. No. 13), and needs to strengthen its processes to ensure identified legislative non-compliance matters are remediated (Rec. No. 14).
- Why it's important—The government ultimately guarantees the full value of deposits held at ATB and Alberta credit unions. This financial guarantee is a significant risk if these entities are not operated in a safe and sound manner.
- Oversight of Peace Officers (of Solicitor General and Public Security)—page 115
- What we found—The Department can improve its administrative systems to ensure authorized employers of peace officers comply with legislation and Peace Officer Program policy. For example, we found that the Department uses only an informal process to schedule compliance audits of authorized employers, and working papers did not adequately document the findings and recommendations set out in the associated audit reports. We did not find any evidence that public safety is at risk.
- What we recommend—The Department should improve its processes to monitor and ensure that employers implement its compliance audit recommendations (Rec. No. 15), and improve its monitoring of employers’ investigations of complaints made against peace officers (Rec. No. 16).
- Why it's important—Albertans need to know that the Department fulfills its oversight role and ensures that authorized employers and their peace officers provide an effective and appropriate level of public security within the framework of legislation and policy governing the Peace Officer Program.
- Advanced Education and Technology—page 151
We made 20 recommendations to post-secondary institutions—18 are new and 2 are repeated. Here are the highlights:
- Advanced Education and Technology, through the Campus Alberta Strategic Directions Committee, needs to work with post-secondary institutions to identify best practices and develop guidance for them to implement effective enterprise risk management systems (Rec. No. 17). While all institutions manage risks, through various methods, these systems could be more effective.
- Grant MacEwan University has two new numbered recommendations. The University needs to implement or improve some entity level policies and processes (Rec. No. 18) and it needs to implement a quality assurance program for its enterprise resource planning renewal project (Rec. No. 19).
- We audited six Institutions’ controls related to internal working sessions and hosting guests. We recommend that three Institutions improve their policies and guidance, and that four Institutions follow their policies and processes for employee expense claims and corporate credit cards.
- We continue to report on three themes that were highlighted in the April 2009 Report. Institutions need to:
- improve financial reporting to senior management and board audit committees
- improve internal control systems to safeguard assets, limit access to information, clarify and segregate roles and responsibilities, review and approve transactions, and reconcile financial records promptly
- define goals for the use of endowment earnings and the preservation of endowment assets.
Attachment: List of April 2010 Numbered Recommendations.
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For more information, please contact:
Lori Trudgeon | Communications Manager | Office of the Auditor General of Alberta
Telephone: 780.422.6655 | Mobile: 780.909.5841 | Email: ltrudgeon@oag.ab.ca
The report is available at www.oag.ab.ca. For a copy on CD-ROM, please call 780.427.4222.
Attachment
Here are the numbered recommendations included in the Report of the Auditor General of Alberta—April 2010. These recommendations require a formal response from the government. By implementing these recommendations, the government will significantly improve the safety and welfare of Albertans, the security and use of the province’s resources, or the governance and ethics with which government operations are managed.
April 2010 Numbered Recommendations
Systems audits
Cross-Ministry—Alberta Schools Alternative Procurement
[Page 22] Challenging and Supporting Assumptions—Recommendation No. 1
We recommend that the Departments of Treasury Board and Infrastructure improve processes, including sensitivity analysis, to challenge and support maintenance costs and risk valuations.
[Page 24] Transparency—Recommendation No. 2
We recommend that the Departments of Treasury Board and Infrastructure follow their own guidance to publish a Value for Money Report upon entering into a Public Private Partnership (P3) agreement.
Employment and Immigration—Occupational Health and Safety
[Page 39] Promoting and enforcing compliance—Recommendation No. 3
We recommend that the Department of Employment and Immigration enforce compliance with the Occupational Health and Safety Act by employers and workers who persistently fail to comply.
Environment—Managing Alberta’s Water Supply
[Page 65] Backlog of Water Act applications—Recommendation No. 4
We recommend that the Department of Environment minimize the backlog of outstanding applications for Water Act licences and approvals.
[Page 68] Assessing compliance with the Water Act—Recommendation No. 5
We recommend that the Department of Environment ensure its controls provide adequate assurance that performance in the field by licence and approval holders as well as others complies with the Water Act.
[Page 71] Wetland compensation—Recommendation No. 6
We recommend that the Department of Environment formalize its wetland compensation relationships and control procedures.
[Page 73] WPAC grants and contracts—Recommendation No. 7
We recommend that the Department of Environment strengthen its control of grants and contracts with Watershed Planning and Advisory Councils.
Finance and Enterprise—ATB: New Banking System Implementation
[Page 84] Project management—Recommendation No. 8
We recommend that Alberta Treasury Branches improve the management of its Core project by:
- resolving pending business decisions, dealing with remaining change requests, and locking down the project’s scope so that the project’s design phase can be completed
- developing a new project plan with a realistic schedule and budget to complete the project
[Page 84] Project management—Recommendation No. 9
We recommend that Alberta Treasury Branches examine its existing project management controls and clearly identify, and put in place, the new controls necessary to minimize the risk that the project will not be completed within the revised timelines and budget or will not deliver the expected functionality.
[Page 84] Project governance—Recommendation No. 10
We recommend that Alberta Treasury Branches conduct reviews of the Core project at clearly identified checkpoints within the revised project plan to ensure the deliverables are accepted by the Core project’s Strategic Steering Committee and there is clear agreement for the project to continue.
[Page 85] Performance reporting—Recommendation No. 11
To improve monitoring and oversight of the Core project, we recommend that Alberta Treasury Branches’ management provide the Board of Directors with more information on:
- project performance in relation to the revised schedule and budget
- stage of completion of significant project deliverables (percent complete and percent of budget consumed)
- explanations for variances between actual results and the revised project plan, and the actions taken to deal with the causes
Finance and Enterprise—Oversight of Financial Institutions
[Page 96] Improving accountability—Recommendation No. 12
We recommend that the Department of Finance and Enterprise clarify its business objectives for Alberta Treasury Branches, within their Memorandum of Understanding, in relation to the level of risk the Department expects Alberta Treasury Branches to take.
[Page 97] Implementation plan for regulatory and supervisory frameworks—Recommendation No. 13
We recommend that the Department of Finance and Enterprise develop an implementation plan for its approach to regulating and supervising regulated financial institutions.
[Page 101] Monitoring legislative compliance—Recommendation No. 14
We recommend that the Department of Finance and Enterprise strengthen its processes to ensure identified legislative non-compliance matters are remediated.
Solicitor General and Public Security—Oversight of Peace Officers
[Page 120] Follow-up of compliance audit report recommendations—Recommendation No. 15
We recommend that the Department of Solicitor General and Public Security improve its processes to monitor and ensure employers implement its compliance audit recommendations by:
- developing, maintaining and monitoring a database of the implementation status of all audit recommendations
- requiring timely written confirmation of compliance from employers
- ensuring files on employers are properly maintained
- taking necessary and timely action against non-compliant employers
[Page 125] Monitoring employers’ investigations of peace officers—Recommendation No. 16
We recommend that the Department of Solicitor General and Public Security improve monitoring of employers’ investigations of complaints made against peace officers by:
- following current policy and best practices, including managerial approval of concluded files, and implementing proper filing procedures
- providing written notification to an employer when closing a file
- better maintaining its databases
Financial Statement and Other Assurance Audits
Advanced Education and Technology
[Page 158] Cross-Institution recommendations—Enterprise risk management—Recommendation No. 17
We recommend that the Department of Advanced Education and Technology (through the Campus Alberta Strategic Directions Committee) work with post-secondary institutions to identify best practices and develop guidance for them to implement effective enterprise risk management systems.
[Page 174] Grant MacEwan University—Improve and implement University policies—Recommendation No. 18
We recommend that Grant MacEwan University improve its control environment by implementing or improving:
- a code of conduct and ethics policy and a process for staff to acknowledge they will adhere to its policies
- a process for staff to annually disclose potential conflicts of interest in writing so the University can manage them proactively
- a safe disclosure policy and procedure to allow staff to report incidents of suspected or actual frauds or irregularities
- a responsibility statement in its annual report to acknowledge management’s role in maintaining an effective control environment
[Page 178] Grant MacEwan University—Implement a quality assurance program for enterprise resource planning project—Recommendation No. 19
We recommend that Grant MacEwan University develop and implement a quality assurance program for its enterprise resource planning renewal project
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For more information, please contact:
Lori Trudgeon | Communications Manager | Office of the Auditor General of Alberta
Telephone: 780.422.6655 | Mobile: 780.909.5841 | Email: ltrudgeon@oag.ab.ca
The report is available at www.oag.ab.ca. For a copy on CD-ROM, please call 780.427.4222.
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