Approach and Methodology

The observations and recommendations of this report are based upon the following:

• Drafting of organization-specific interview guides relevant to employee level based on internal control environment principles
• One-on-one discussions with 35 selected interviewees, and analyses of responses to parallel and consistent questioning. Several WD program managers were interviewed. Interviewees included at least the following, for each WEI in each province:
  • The CEO
  • The Loans Manager
  • At least one Business Advisor
  • The Financial Administrator
  • A member of the Board of Directors
  • The WD client liaison in each province
• Analyses of interview responses to draw parallels and map conclusive themes indicative of the control environment
• Follow-up conversations with key WEI members for clarification and additional examination of the control environment
• On-site walk through of the control environment for first-hand experience of the corporate culture, meet and greet with employees in each WEI office
• Review and analysis of each WEI's administrative, human resource, governance, financial, operational, and loan policies
• Review of the roles and responsibilities of interviewees against job requirements, including a review of interviewees' education and background experience
• Review of audited financial statements and management letter points
• Review of program reporting and performance statistics
• Review of financial authority and loan processing procedures
• Review of external audit reports on internal controls
• Review and analysis of WD contribution agreements and accountability requirements of WEIs
• Review and analysis of WEI strategic planning, business plans, and operational and financial reporting
• Sampling of loan documentation from each WEI for compliance testing. A sample of 10 loans from each WEI was selected using the following sampling criteria:
  • Loan must be currently outstanding
  • 5 loans of $50,000 or more
  • At least one loan in default
  • At least one loan from each of the past five years
  • No loans older than 5 years
• Testing of loan documentation against the criteria outlined in the WD Contribution Agreement. The criteria tested against included:
  • Business Plan included in application
  • ID present
  • Purpose of loan and activities
  • Effective date, termination date and signing date
  • Conditions of the loan agreement
  • Financial responsibilities of the Centre and borrower
  • Eligible costs
  • Method of payment
  • Interest rate, repayment terms and collateral (if any)
  • Repayment terms due to breach
  • Asset insurance provision
  • Borrower's written acceptance of loan terms and conditions
  • Provision for reports required by WEI
  • Change of ownership provision
• Additional research and enquiry performed by KPMG

A list of the WEI and WD participants in the one-on-one confidential interviews is included in Appendix A.

The findings and conclusions of this report are based upon the above noted information received as of the time of writing. Additional information may impact on the matters commented upon in this report.