Audit of Contracting

Table of Contents (September 2008)

• Executive Summary
• Introduction
  • Background
  • Objectives
  • Scope and Methodology
• Findings and Recommendations
  • Policy Framework
  • Roles and Responsibilities
  • Communication/Training
  • Monitoring and Reporting
  • Contract Planning and Requirements Definition
  • Pre-approvals
  • Content of Contract Files
  • Invoicing
  • Approval of Payment
  • Post-Contract Evaluation
  • Proactive Disclosure
• Conclusion
  
• Management Response and Action Plan - October 2008

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Executive Summary

• Procurement is an issue of high significance in the Government of Canada. As a result, increased attention has been given to this area across the federal public service. Due to increased awareness, and in recognition of the risk associated with procurement, an Audit of Contracting was included in Western Economic Diversification Canada's (WD) approved 2008-2011 Risk-Based Audit Plan.
  
  
• The overall objective of the audit was to provide assurance that WD's contracting function is operating efficiently, economically and effectively, and in accordance with both Treasury Board and departmental policies and directives. The specific objectives of the audit were:
  
  
  • To assess the extent to which a management control framework is in place, meets Treasury Board and departmental expectations, and is functioning as intended; and
    
    
  • To determine the extent to which departmental contracting activities and practices comply with Treasury Board and departmental standards.
    
    
• The audit, conducted in accordance with the Government of Canada Standards for Internal Auditing, covered the procurement of goods and services approved during the fiscal year 2007-2008. During that period, WD awarded a total of 646 contracts for goods and services totalling $7.6 million. The audit scope covered approved contracts, call-ups against standing offers, supply arrangements, purchase orders and acquisition card purchases. Selected transactions were examined in detail in order to assess compliance with policies, guidelines and procedures.

Findings and Conclusions

• The results of the audit indicate that, in many key areas, the department is managing its procurement and contracting program well. The basic components of a contracting management framework exist.
  
  
• Generally, contract requests are clearly defined, adequately justified, properly approved and appropriate procurement methods are utilized. There is a high degree of compliance with Sections 32 and 34 of the Financial Administration Act (FAA). Contracts over $10,000 are proactively disclosed on WD's public website.
  
  
• There are areas where improvement can be made to strengthen overall effectiveness of the contracting function. Those areas of improvement are outlined in the recommendations included in this report.
  
  
• In the professional judgement of the Chief Audit Executive, sufficient and appropriate audit procedures have been conducted and evidence gathered to support the accuracy of the conclusion contained in this report. In accordance with the Government of Canada internal audit standards, a reasonable assurance is provided that the existing WD contracting management control framework meets Treasury Board Secretariat and departmental expectations and is functioning as intended. The conclusion is based on a comparison of the conditions, as they existed at the time, against pre-established audit criteria that were agreed with management.