Executive Summary

Purpose and Scope of the Project

KPMG was engaged by Western Economic Diversification Canada (WD) to conduct a review of the Women's Enterprise Initiative (WEI) for Internal Audit purposes. The objective was to review the general control environment framework of WEI. KPMG also selected a sample of loans to test compliance of the lending decision with WD's Contribution Agreement.

As the WEI program is administered by four separate organizations in each British Columbia, Alberta, Saskatchewan and Manitoba, each Provincial organization was reviewed independently. KPMG's review consisted primarily of one-on-one interviews and an analysis of key documents, and loan files selected for review. The review was conducted during the period from November 1, 2007 to December 31, 2007.

Findings and Conclusions

Based on the results of the work completed and the Audit Rating Results Criteria applied (see Appendix D) the control environment at all WEI centres is assessed as Satisfactory. A finding of a Satisfactory control environment means that overall the program is operating reasonably well but some areas could be improved.

Based on the interviews conducted and review of documents, each WEI has a control environment and system of management-level internal controls appropriate for the size and nature of the organization. Policies and procedures, roles and responsibilities are defined and appear to be implemented. Financial and operational reporting is adequate for WD's purposes, and strategic, business, and budgetary planning is sufficient to support and guide operations. Each WEI is organized and managed slightly differently than each other, with distinct policies and procedures. However, the controls in place in each province appear appropriate.

With respect to the loan testing KPMG found no exceptions to WD contribution agreement requirements in British Columbia, Alberta, Saskatchewan and Manitoba. Based on the results of the work completed, the use of loan funds in accordance with the Contribution Agreement criteria would be assessed as Satisfactory using the Audit Ratings Results Criteria.

Detailed Findings are included in the Presentation of Findings section of this report and Appendices A through C.

Key Recommendations

KPMG has made several recommendations for improvement for each of WEI centres in BC, Alberta, Saskatchewan, and Manitoba, and for WD. Detailed recommendations are included in the Presentation of Findings section of this report and Appendices A through C. In summary, KPMG made recommendations regarding the following:

• Boards of Directors should closely monitor CEO performance and develop performance evaluation criteria under a policy governance model
• Segregation of duties can be improved and should be assessed and monitored by each CEO
• Background checks for new employees are not completed in most provinces
• Contribution Agreements should be revised to reflect WD's expectations regarding loan policies and operational and performance reporting requirements
• Some key corporate policies or procedures are not yet fully documented at each WEI centre