Western Economic Diversification Canada
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Executive Summary

The audit of Monitoring and Payments was identified in Western Economic Diversification Canada’s (WD) approved 2011-2014 Risk-Based Audit Plan. The audit was important as monitoring and payments activity is a key function within transfer payment administration that impacts all departmental programs.

The Treasury Board of Canada made significant changes to its Policy on Transfer Payments in 2008. The policy caused changes in monitoring and payment practices in federal transfer payment programs. In particular, the policy called for reduction in administrative burden, risk management practices commensurate with level of funding risk, recipient engagement and establishment of service standards for programs approved after March 2010.

The purpose of the audit was to provide assurance to the Deputy Minister that the department has a sound management control framework to manage monitoring and payments of grants and contributions and that the controls are operating as intended.

Findings

The monitoring and payments control framework established by management meets the department’s objectives and it is aligned to the Policy on Transfer Payments and its related directives. There is an appropriate and effective control framework and structure in place that guides operations and resources to enable successful project administration.

A payment claims process that complied with federal legislation and policy existed. To minimize administrative burden on recipients, the department has implemented two claim processes: comprehensive and expedited. The expedited option reduced the amount of documentation and verification based on risk. Payments were made for eligible costs in accordance with the department’s selection of that funding option out of the three allowed under the Directive on Transfer Payments.

The audit criteria established were mostly met. The minor exceptions noted were mostly related to non-compliance with departmental standard processes and they were infrequent and immaterial with minimal residual risk.

The information management and technology plans that we examined indicated that the automation of monitoring and payments has been discussed for the last five years, yet monitoring and payments still remain a relatively manual and labour-intensive process. The opportunity may exist to be more responsive to recipients’ needs and to gain staff efficiencies through the automation of several key monitoring and payments processes.

Statement of Assurance

In my professional judgement as Chief Audit Executive, sufficient and appropriate audit procedures have been conducted and evidence gathered to support the conclusion that the Grants and Contributions Monitoring and Payments has a sound management control framework in place and the controls are operating as intended, subject to consideration of the opportunities recommended for continuous improvement in serving clients.

The assurance is based on a comparison of the conditions, as they existed at the time, against pre-established audit criteria that were agreed upon with management. The assurance is applicable to the policies, processes and controls examined. The evidence was gathered in accordance with Treasury Board policies, directives, and standards on internal audit for the Government of Canada. Sufficient evidence was gathered to provide senior management with the proof of the conclusions derived from this audit.