Executive Summary

The Governance and Performance audit is an internal audit assurance report on governance¹ and performance management controls existing at Western Economic Diversification Canada (WD) for the period April 2006 to September 2007. The audit topic is identified in the WD Audit Universe and the 2007-08 Risk Based Audit Plan. The audit examined evidence of management controls of governance and accountability frameworks and their integration at the strategic level². The audit examined the extent to which existing management controls for governance and performance meet the standards and criteria established by the Treasury Board of Canada Secretariat (TBS).

Findings

The audit found that management is fulfilling its responsibility to control and direct the work of the department through the Deputy Minister, regional Assistant Deputy Ministers and functional managers. WD is committed to improving performance measurement and results reporting. This is demonstrated in investments like “Project Gateway”, project management software that among other things tracks project performance, and the development of the Management, Resources and Results Structure (MRRS) that is progressing on schedule.

The audit work identified opportunities for improvement, which if implemented, will enhance departmental governance and performance reporting. The challenge often was the lack of formalized documentary evidence to support the control process described to auditors. The opportunities for improvement identified were assessed as low to medium risk after giving due consideration to significance, potential impact, and the continuous improvement efforts already under way. The audit observations are outlined under the following themes:

1. Governance and Strategic Direction;
2. Resourcing Strategic Priorities;
3. Delivering and Monitoring Priorities; and
4. Reporting Performance Results.

What we examined

The audit focused on examining the extent to which existing management controls for governance and performance meet Treasury Board standards and audit criteria. The audit assessed the effectiveness of management coordination, the communication of initiatives, and the strategic direction to maximize performance.

Audit importance

WD plays a significant role in terms of federal government funding and accountability since it administers over $250M annually in grants and contributions. As a department with only 380 employees, WD cannot rely alone on the accessibility and involvement of senior management. WD also needs a strong control framework to help achieve its strategic objectives. The Federal Accountability Act (FedAA) reinforces the accountability of the Deputy Minister and the importance of strong internal controls. This audit will provide assurance and opportunities for improvement in the areas of governance and performance controls and processes at WD.

Conclusion

In summary, controls established for governance and performance by management are effective in design and are operating satisfactorily. Based on internal audit standards and criteria selected, sufficient audit work has been completed and analyzed to support the conclusion that governance and performance controls framework for which WD management is responsible is appropriate for WD’s size and risks.

In accordance with the Government of Canada internal auditing standards and the nature of the subject matter under audit, a reasonable assurance is provided that relevant and reliable management controls exist at WD to result in good governance and performance.

In addition, opportunities for improvement have been identified in this report where those controls can be strengthened in order to mitigate risk and contribute to management excellence.

_______________________________

¹ Governance refers to the process and structure for overseeing the direction and management of an organization so that it carries out its mandate and objectives effectively. Good governance is important to maximize performance, satisfy clients, prevent financial mismanagement, and help to achieve the organization mandate (Auditor General of Canada – 2004 Report).

² Strategic level for this audit refers to activities and documentation at the Management Committee level (Executive Committee, Regional & Headquarters Management Teams, Directors’ level and/or functional head Managers) i.e. expected: actions, knowledge, duties, roles, responsibilities, tools, resources; and information, that are expected to be disseminated, communicated and/or information expected to be available to the strategic level manager/director either as an individual function head; or collectively actions or documentation expected as a management team