Audit Objectives, Scope, Methodology and Approach

Audit Objectives and Scope

The objective of this audit was to conduct a thorough program audit on all aspects related to the Western Diversification Program life cycle. As such, the auditors examined key internal processes and controls as well as compliance to the Financial Administration Act, WDP Terms and Conditions, and Treasury Board Policies with respect to:

• Program Design- Review program Terms and Conditions, financial and performance reporting at the program level, review and document approval authorities, as well as controls and processes.
• Program Operations - Review controls required to ensure due diligence; review and approve applications in a complete and appropriate manner and provide persuasive assessments based on relevant documentation to support decisions to approve assistance. Review controls required to ensure responsible fund management, and to ensure that resources are used efficiently and that payments and repayments occur in a timely manner.
• Review and Evaluation - Review findings of past audit and evaluation reports and assess the status of actions taken as a result of past studies.

The scope of the audit included an examination of all activities related to WDP and its sub-components, including the management control framework in place at departmental headquarters and at the four regional offices. The Liaison Office in Ottawa was excluded from the scope of this audit as it is not involved in the direct delivery of the WDP.

Audit Methodology and Approach

In accordance with the audit objectives and the Government of Canada Internal Audit Standards, the audit was carried out in three phases: the planning phase, the conduct phase, and the reporting phase.

During the planning phase, the auditors proceeded with a thorough review of documents provided by the department, and of the Treasury Board Secretariat of Canada policies to gain an understanding of the overall legislative and policy framework, as well as the processes relevant to the audit scope. Preliminary interviews were conducted with departmental corporate and regional personnel to gain greater knowledge of management controls and processes in place for the WDP, and to identify key risks associated with the delivery of the program.

The purpose of the planning phase was to develop a Risk-Based Audit Program that provides a basis for the orderly, efficient, and cost effective conduct of the audit as well as a criteria base for assessment.

During the conduct phase, the audit team visited, as per the scope of the audit, headquarters in Edmonton, and the four regional offices. From these visits, the audit team selected documents; conducted interviews, performed project file reviews, and debriefed management on preliminary findings.

Findings for each line of enquiry were summarized and referenced on fact sheets. Facts sheets were prepared for each region and for headquarters and then grouped to reflect audit findings at the program level.

Key Audit Risks

The audit program was designed to test management's controls that have been developed to mitigate the following key risks associated with the Western Diversification Program:

• The WDP authorities are not renewed on time and expire;
• Inadequate due diligence is conducted on projects;
• There is a lack of clarity over eligibility criteria and assessment against the criteria;
• Ineligible expenses are funded;
• Non compliance to Treasury Board policies or the Financial Administration Act; and
• Non compliance with the Treasury Board authorities for the WDP.