Follow-up on Outstanding Audit Recommendations Report

Background:

Western Economic Diversification Canada (WD) began a comprehensive follow up process on outstanding audit recommendations in 2008. At that time, all outstanding recommendations from previous audits were reviewed to determine whether or not there was evidence to support their implementation.  In 2008, 232 outstanding recommendations were reviewed, some going back many years. Internal Audit determined that 215 of those 232 recommendations examined were complete, for a historical completion rate of 92.6%.

Internal Audit now coordinates with management to conduct regular follow up reviews every six months to assess progress towards agreed upon action plans. Internal Audit presents an update to the Departmental Audit Committee and the Deputy Minister every six months, currently in March and September of each year.

Current Results:

Of the audits that were completed in the past five years, Internal Audit has deemed that 76.4% of the recommendations made are now considered to be complete.

The current review examined the 36 active recommendations resulting from internal audits approved and posted on the website up to February 3, 2010. The breakdown of the status of those 36 recommendations is as follows:

• 10 of those recommendations have been completed;
• 16 of those recommendations have completion dates after the time of this review; and
• 10 recommendations were still outstanding and had not yet been fully implemented by management.

Of special note, seven of the ten overdue recommendations arose from the Audit of Infrastructure Programs that was completed in February 2009.  Management has advised Internal Audit that because these specific Infrastructure programs are winding down, these action items will no longer be implemented.

Key Issues:

1. Of the 26 recommendations yet to be fully completed, four were considered to be of high priority, nine were rated as medium risk and 13 were low risk in nature.
   
   The outstanding recommendations indicated to be of high residual risk were recommendations made in the Audit of the Community Futures Program (April 2009) and the Audit of the Western Diversification Program (September 2009).  All four high risk recommendations have anticipated completion dates of March 2010 and are expected to be complete at the time of the next follow up review. 
   
   The two high risk recommendations arising from the Audit of the Community Futures Program are:
   
   
   • WD should standardize, document and consistently apply its monitoring and review practices related to the CF's operating plans, financial statements, performance reports, project risk assessments, and corresponding site visits.
     
     
   • WD should establish formal processes to demonstrate adequate active monitoring of the CF's program compliance and performance.

   The two high risk audit recommendations arising from the Audit of the Western Diversification Program Audit are:

   • The Department should assess the risk associated with the current practice of having a high frequency of start dates occurring before signature of the agreements, and take action to reduce such risks by addressing the cause of the issue.
     
     
   • Corporate Finance needs to verify that PAYE balances are being set up in accordance the Financial Administration Act and departmental procedures.
     
     
2. In addition, three of the nine medium ranked outstanding recommendations fall under the category of Information Management/Information Technology and under the functional responsibility of the Chief Information Officer. One of those nine recommendations dates back to a July 2006 audit and had an original planned completion date of 2006. Another outstanding item relates to a commitment made on a July 2007 audit that is also still outstanding.
   
   
3. Management has determined that it will not be taking any action on the seven recommendations arising from the February 2009 Audit on Infrastructure Programs since the programs are in the process of winding down. Internal Audit has not seen any formal management record of decision to this effect.