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Internal Audit and Evaluation Documents

April 2006
Performance, Evaluation and Audit Group

Introduction

The 2006-2009 Plan represents the Parks Canada Performance, Evaluation and Audit Group's (PEAG) fifth risked based performance, internal audit and evaluation plan. It builds on previous risk-based plans, findings from internal audit and evaluation projects, work on improving performance information in the Agency, knowledge of other review processes (i.e., Auditor General's work, internal manager-led studies), interviews with senior managers carried out in March 2005 and a review of TBS and government-wide issues and requirements. The analysis of threats and risks underlying the Plan reflect the views of the PEAG team, based on a synthesis of these different sources of information as of March 2005 (see appendix A for a description of the risk assessment process). Our views of threats and risk levels will evolve over time as circumstances change, and new information becomes available.

The Audit and Evaluation Committee of the Parks Canada Executive Board, chaired by the Parks Canada CEO, approved this plan on May 15, 2006.

Background

Parks Canada was established as an agency of the federal government in the Parks Canada Agency Act in December 1998. Its mandate is to protect and present nationally significant examples of Canada's natural and cultural heritage, and to foster public understanding, appreciation and enjoyment in ways that ensure their ecological and commemorative integrity for present and future generations. Parks Canada currently manages networks of 42 national parks, 155 national historic sites and 2 national marine conservation areas as well as directing or co-ordinating delivery of several smaller programs that conserve aspects of Canada's heritage (e.g., the Historic Places Initiative, the Federal Heritage Buildings Program, the Federal Archaeology Program).

National parks and national historic sites are organized into thirty-two geographically based field-units. About 80% of Parks Canada's work force is based in the field where most of its program expenditures take place. The work of field units is supported by Service Centers located in Halifax, Quebec City, Cornwall/Ottawa and Winnipeg (with small branch offices in Calgary and Vancouver). The Service Centers comprise about 10% of the work force and provide technical and professional services to field units (e.g., science, research, design services). National office, less than 10% of the employee base, consists of five directorates (National Parks, National Historic Sites, Strategy and Plans, Human Resources and External Relations and Visitor Experience) who provide legislative, operational policy, planning, program direction, financial management, and human resources functions and services.

The Evolving Context

Since the preparation of the previous Performance, Internal Audit and Evaluation Plan there have been several broad changes in the government context and more specifically in the Agency. However, transparency and accountability principles for expenditures in general and on probity in contracting, staffing, promotions still apply. The Audit and Evaluation Functions of the Agency must keep ensuring that public funds are spent judiciously, that programs are relevant and resources optimized. Here are some of the changes that occurred:

  • The creation, in October 2005, of a new directorate, External Relations and Visitor Experience, will allow the Agency to better coordinate its efforts in developing a culture of conservation and facilitating memorable experiences. This new structure has been put in place in response to a recommendation from the third Minister's Roundtable on Parks Canada (2005) as well as to better align the National Office functions and the strategic objectives stated in Parks Canada's Corporate Plan. 
  • The confirmation in April 2005 of substantial new funding for Parks Canada for five years, starting in 2005-2006, to implement the Parks Canada Action Plan in response to the Ecological Integrity Panel Report ($60M); to protect our National Historic Sites and rehabilitate our visitor facilities and interpretive assets in National Parks and NMCAs ($209M); and to complete and maintain the Canadian Register of Historic Places, support the certification process and continue agreements with provinces and territories for the Historic Places Initiative ($46M). 
  • The approval of a proposition to progressively increase the user fees for our services, over a period of four years, and to reinvest these revenues within the visitor's facilities. 
  • The implementation of the Agency's new corporate orientation by the field units as reflected in their management plans and operations. 
  • Increased emphasis on the involvement and engagement of stakeholders in a variety of areas and in turn, increasing the importance of having clear internal audit and evaluation standards for these activities. 
  • Employee survey results and other studies in the Agency have highlighted concerns with areas such as internal communications, and consistency in the application of rules and policies that raise important areas for possible future audit and evaluation work. 
  • In November 2004, the Auditor General published a performance audit related to government management of cultural resources including significant aspects of Parks Canada's programming (i.e., Protection of Cultural Heritage in the Federal Government, November 2003). During 2004-2005, the Auditor General undertook a performance audit of ecological integrity in national parks. Because of this work, internal audit and evaluation resources can be directed to other risk areas. 

The Role of Internal Audit and Evaluation

In February 2005, Parks Canada's Internal Audit and Evaluation Committee approved several changes affecting the structure and functioning of the internal audit and evaluation group in order to increase independence, objectivity and transparency of the functions. Since April 2005:

  • the manager of internal audit and evaluation reports functionally to the CEO and administratively to the CAO; 
  • separate heads of Internal Audit and Evaluation reports to the manager of the function; 
  • the Director Executive, Finances is an ex-officio member of the committee 
  • Parks Canada publishes complete reports of internal audit and evaluation studies on its web site. 

The new Internal Audit Policy, prepared by Treasury Board Secretariat, will be effective on April 1st, 2006. The Agency totally supports this new policy and will make all the necessary changes to its audit and evaluation committee membership as the Controller General Office will identifies potential candidates and makes the required funds available.

Moreover, with regards to the new policy, the Agency is considered a large department and as such will have to conduct audits requested by the Controller General Office. There is enough flexibility in the Agency's audit and evaluation plan to be able to address these requests when presented to the Performance, Evaluation and Audit Group during the course of the fiscal year.

The role of internal audit and evaluation activities continues to be one of helping managers and providing assurance to executives in the management of targeted risks. Specifically, internal audit or evaluation provide:

  • expertise to ensure the intended results of business strategies and objectives are clear, plausible and measurable; 
  • reasonable assurance to executives that systems to identify and manage risks are in place and functioning, and that risks are communicated (i.e., risk frameworks); 
  • reasonable assurance that plans and processes to manage risks are completed and implemented as intended and with reasonable chance of success (i.e., management control systems); 
  • reasonable assurance that assets and funds are protected; 
  • evidence that program performance information is accurate and useful for decision making; and 
  • evidence of continued program relevance, results achievement, production of unintended results and the existence of cost-effective alternatives. 

Status of 2005-2006 Performance, Evaluation and Audit Plan

The following shows the status of the internal audit and evaluation projects committed to in the previous Performance, Evaluation and Audit Plan.

 

Project

Type

Status*

INTERNAL AUDIT

Follow ups – audit and evaluation

Follow-up

Audit follow up scheduled in the Fall of 2005 has been postponed to the Summer of 2006.
Results of an audit conducted done during the year forced the execution of 5 more audits not scheduled in the original calendar.

Financial and Administrative Management Audits

Assurance

Seven audits, started in 2004/05 were completed in the first quarter of 2005/06. Five audits scheduled in 2005/06 were completed and apporved by the Audit and Evaluation Committee in the fourth quarter of 2005/06. Moreover, as planned previously, a new audit program for financial coding as been developed and added to the other programs of this item.

Asset Management System Framework

Framework

Developing an audit framework about Asset Management System i.e. system description, identification of risks, identification of upcoming audit works. Limited resources didn't allow the completion of this project now scheduled for June 2006.

Pay and Benefits

Assurance

Audit work completed in the fourth quarter of 2005/06, report to be approved.

Staffing

Assurance

PCA, as an independent employer, developed its own staffing policies based on the Agency Code of Ethics. The system tailored to PCA organizational needs gives management flexibility when selecting, appointing and developing employees. The audit objective is to ensure that staffing decisions are made in respect of the policies. Project postponed to 2006/07 due to resource constraints.

EVALUATION

Ecological Integrity Framework

Framework

Completed in the fourth quarter 2005/06

Evaluation of Species At Risk Programs

Framework

A formative Evaluation of Species at Risk Programs is required by TBS in 2005-06 as part of the funding condition. This evaluation is a inter-departmental project (PCA, DOE and DFO) led by Environment Canada. The evaluation will assess SARA programs' progress in the last two years and their likelihood to achieve their desired outcomes. Overall, federal funding for SARA Programs is $228M for the period 2003/04-2007/08 of which $37M is allocated to the PCA. Project started in September 2005 and should be completed by June 2006.

Formative Evaluation of Engaging Canadians

Framework

The Engaging Canadians Initiative seeks to coordinate, prioritize and link all external communications activities in order to reduce risks that external communications are not coherent and consistent and that communication in the Agency does not reach or engage intended audiences. The formative evaluation is recommended as part of the approved (2005) Performance and Evaluation Framework for Engaging Canadians. Project started in September 2005 and should be completed by June 2006.

Formative Evaluation of Corporate Orientation

Evaluation

This formative evaluation of the Corporate Orientation will assess the extent to which field units are making progress in implementing the corporate orientations in Management Plans, operations and service delivery. The project has been postponed and resources reassigned to a formative evaluation of Commercial Heritage Properties Incentive Fund (CHPIF) to be completed by June 2006.

Review of Future Direction of SOPHA

Evaluation

Completed in 2005/06

Grants and Contributions RMAFS and Evaluation

Advice

Completed in 2005/06

PERFORMANCE

Performance Report

Coordination of Report

Coordinate input and write the Performance Report with emphasis on aiding managers to develop systems to report on key aspects of Agency's performance.

Performance Framework for Service Centres

Advice

Identification of key results and supporting measurement systems and processes for service centers.

Review of Highways Safety Measurement and Reporting Practices

Background Paper

A review of federal, provincial and international standards for measuring and reporting on highway safety incidents for background in helping Parks Canada develop measures in this area. The PEAG will collaborate with the Highways Service Centre, which will lead the project from now on.

* Completed means that a final report has been written and approved by the Audit and Evaluation committee where required.

Planned Performance, Evaluation and Audit Projects

Table 1 below shows the planned projects by product lines for 2006-2007. Table 2 shows a summary of planned G&S expenditures for the 2006-2007 fiscal year. Table 3 shows potential projects for the two following fiscal years.

Table 1: Planned Projects by Product Line 2006-2007

Table 2: 2006-07 Planned G&S expenditures (rounded to nearest thousand) (Does not include program funds)

 

 

Audit

Evaluation

Performance

*Projects

Frameworks
Assurance Audits
Evaluation
Performance Information

$45,000
$130,000
 

$30,000

$50,000

 




$60,000

Support

Professional Training
Printing/HTML**
Miscellaneous*** (e.g., Lang training, supplies, equipment)

$3,000

$25,000
$17,000

$3,000

$17,000
$17,000



$51,000
$17,000

 

Total

$220,000

$117,000

$128,000

*Project expenditures include travel costs by staff and consultants
** Printing includes new costs for HTML versions of reports posted to Parks Canada Web Site
***Miscellaneous expenditures have been prorated across the three lines of business

Table 3: PROJECTS FOR SUBSEQUENT YEARS
(Note: The following are potential projects, the list will be finalized subject to the annual risk-based planning)
2007/08

 

Project

Type

Description

INTERNAL AUDIT

Delegation Framework

Assurance

The audit would look at whether established delegations (Human Resource, Financial, Contracting) are being used, whether use is consistent with delegation charts, and whether managers have the tools and training to use the delegated authority effectively.

Audits of Partnerships

Assurance

Audits of the partnership agreements will address whether the inherent risks in such agreements are adequately managed.

Audit Framework for Information Management

Framework

Management of information is widely seen to be inadequate within government Lack of adequate information management can lead to inefficient operations, duplication of effort, loss of crucial information, poor decision-making, loss of reputation, and negative media coverage. An audit would provide independent assurance that current strategies and practices are adequate for dealing with the problem. The proposed framework would document the current organizational efforts to address this problem and lay out the nature and timing of future audit work.

Audit of financial system STAR

Assurance

Financial results presented by Parks rely on data from the financial system STAR (previously called SAP). The quality and reliability of the controls need to be assessed in order to provide reasonalbe assurance on the accuracy of the data. In the Auditor General Report on March 2004, weaknesses of electronic security controls as well as system monitoring controls were identified. Changes had to be made to these controls. Parks was not one of the departments audited in 2004, however, the quality of our controls need to be assessed especially because a new version of the system has been put in place.

Land Management Framework

Framework

The Land Management Group is currently working to standardize a variety of contracts in order to ensure better control over the agreements entered into by Parks on behalf of the Crown. The first is to identify that various elements of the framework are in place and to assess the risky areas where future audits should be performed.

Attendance Data Quality

Assurance

Attendance data is used to communicate to stakeholders the extent of demand for heritage places, for calculations of economic impacts of parks, for operational management purposes, and to provide context for understanding conservation challenges. Inaccurate or poor data could lead to inappropriate management decisions and loss of public confidence and creditability.

EVALUATION

Evaluation of Internal Communications

Evaluation

Internal communications was identified as an issue in the 2003 Employee Survey and in a review of the implementation of the Engaging Canadians Strategy carried out in Western Canada. This evaluation will focus on the progress in addressing the extent to which currently identified weakness are addressed.

Evaluation of the Science Function

Evaluation

Science and science advice are a key input to decision making aimed at conserving ecological and commemorative integrity, engaging Canadians, and ensuring quality visitor experiences. Inadequate management of science and science advice could lead to inefficient operations, poor decision-making and negative media coverage, loss of reputation and ultimately loss of important heritage resources. The evaluation will look at the state of science and scientific advice in the Agency relative to federal S&T Science guidelines and principles.

Formative Evaluation of EI Funding Initiatives

Formative Evaluation

This project is proposed as part of the Performance and Evaluation Framework for the new EI Funds that is currently under development. The formative evaluation is intended to provide assurance that funds are being spent as intended, that expected activities and outputs are being produced and reaching the intended audiences and that audiences are engaged and that the initiative is on track to produce measurable improvements in ecological integrity in national parks.

Evaluation of Progress in Relationships with Aboriginal Peoples

Evaluation

Improving Parks Canada's focus on and relationships with aboriginal peoples is among fundamental challenges outlined in the Agency's 2004/05 – 2008/09 Corporate Plan. The evaluation would document the relevance of the existing programming and outreach activities, results achieved and best practices.

Evaluation of Interpretation Programming

Evaluation

Heritage Interpretation is the primary mechanism for communicating to on site visitors the nature and significance of the particular heritage place and the role of that place in the national systems. If interpretative programming does not function as desired, the right messages will not be conveyed to intended audiences resulting in failure to engage visitors and lack of support for conservation mandate.

A program lead evaluation of interpretation was conducted in 1997 with a follow-up evaluation in 2003. The latter evaluation focused on processes and systems put in place to address issues identified in the first evaluation. The proposed evaluation would focus on the results achieved from interpretative programming.

BOTH

Audit and Evaluation Framework For Partnership/ Collaborative Arrangements

Framework

Parks Canada is increasingly emphasizing partnering and collaborative arrangements as means of doing business. These kinds of arrangements involve a number of inherent risks as outlined by the Auditor General and TBS including risks of unintended legal liabilities, loss of reputation, failure to achieve results. The framework would identify the audit and evaluation expectations for the range of partnership/collaborative arrangements found in Parks Canada including examples of good practice. Development of the framework would precede conducting audits of specific partnership agreements later in the year.

2008/09

 

Project

Type

Description

INTERNAL AUDIT

Audit of Cost Recovery for Visitor Services

Assurance

Parks Canada policy requires that certain types of services recover their costs. Parks Canada does not have easily accessible information linking costs and revenues for most services leading to risks of non-compliance with government policy, and resulting potential litigation, negative media coverage and loss of reputation. Recent changes to standards for point of sale systems and linking outputs of these systems to financial data are expected to lead to better matching of costs and revenue for those services outlined in Parks Canada's Revenue Policy. The proposed audit will examine the quality of the data and adequacy of the systems for matching costs and revenues.

Audit Framework for IT Security

Framework

Information security, particularly electronic security, is critical to organizations to prevent inadvertent or intentional loss or corruption of key information and to ensure smooth operation of the business and prevent loss of funds or other resources and possible damage to the Agency's reputation. The proposed framework would document current strategies and practices and outline the nature and scope of future audits.

Audit of Material Management

Assurance

The Agency does not have a single material management system. Local systems vary in quality and completeness as documented in the Financial and Administrative Audit Cycle. There are unknown risks of theft, fraud and inefficient program delivery. This audit of the systems would provide assurance that inherent risk management of small value assets (i.e., under $10K) are adequately managed.

Review of Asset Management System

Assurance

The 2005 Budget awarded $209M of new money over 5 years for asset recapitalization. This review will look at the asset management framework and the database in order to determine how well they allow the identification priorities with regards to recapitalization financing. This project initially scheduled in 2005-2006 has been postponed due to lack of resources.

Audit of the Consistency of Classification

Assurance

Parks Canada is currently undergoing a major review of job classifications and developing new policy direction in part to address issues of perceived inequities of classifications across the country. Perceived inequities can lead to lower moral, work place conflict and efficient operations. The audit will provide assurance that current management improvements to policy and systems are functioning as intended.

EVALUATION

Formative Evaluation of the Agency's Orientation

Evaluation

This formative evaluation of the Agency's orientation will measure the progress made by Field Units in their management plans, operations and service delivery with regards to the integration of the orientation.

Evaluation of Management Planning

Evaluation

Management Plans are the key direction setting documents for national parks and national historic sites. Problems with the timeliness of management plans and the sustainability of the commitments have been reported leading to disappointed stakeholders, loss of reputation, and lack of continued engagement with, and support for, Parks Canada.

Performance and Evaluation Framework for Resource Conservation Program

Framework

In 2002 Parks Canada reoriented the resource conservation function around the goals of providing scientific knowledge, protection of heritage resources, building relationships with stakeholders and public safety programming. The evaluation framework would clarify measurable expectations of the renewed function, program managers' roles for monitoring performance and timing and nature of future evaluations.

Note that two projects are also tentatively proposed for the 2008-2009 fiscal year as part of Performance and Evaluation Frameworks currently under development. These are summative evaluations of New EI Funding and of the Engaging Canadians Initiative.

Appendix A Our Risk Model

The new TBS's Policy on Internal Audit (effective April 1st, 2006), the TBS Policy on Evaluation (effective April 1, 2001) and Parks Canada's own Internal Audit (in revision) and Evaluation Policies (revised February 2004) specify that the internal audit and evaluation functions conduct annual planning activities based on consideration of government and organizational priorities, and considerations of materiality and business risks. The resulting plan for internal audit and evaluation should address areas of significant risk. The Performance, Evaluation and Audit Group works with various program managers to identify and categorize more formally the risks that the Agency is exposed to during the course of its operations. This process, valid for 2006-2007 is described below in the Assessment of Risks section. However, members of the Audit and Evaluation Committee commit themselves to have the Agency's risk profile developed in 2006-2007. This profile will allow to better identify the areas where audit and evaluation work is required for the next fiscal years by identifying areas at risk and as a result increase the assurance provided to higher management on program management.

Our risk model is straightforward. A wide variety of inherent threats can impede the achievement of Agency's performance expectations and lead to a variety of negative consequences (i.e., ranging from inefficient operations to loss of materials or funds, disruption of program operations and ultimately loss of significant natural or cultural resources and potential injury or loss of life). Managers, systematically or intuitively, adopt a variety of tools and strategies to mitigate threats given available information and resources. The kinds of mitigations that are adopted depend on the risk tolerance of the manager and the organization. What risk levels are acceptable will depend in part on legislative and resource constraints, as well as the quality of the information about threats and consequences. If mitigation measures succeed there will be some degree of residual risk consistent with accepted risk tolerances.

Assessment of Risks

Our assessment of inherent threats, mitigation measures and residual risks is structured around the Agency's Program Activity Architecture (PAA) formerly known as the Planning Reporting and Accountability Structure (PRAS). The PAA identifies six core programs in the Agency plus corporate and human resource support functions and sub-components of these programs. For each major program area several categories of potential threat are reviewed (see table 4 below shows past and planned projects in relation to Agency programs and threat categories). The major threat categories are:

  • Social-Economic and Political Environment
  • Workplace and Culture 
  • Partners and Clients 
  • Business Results and Operations (including the loss of cultural assets) 
  • Financial and Administration 
  • Environmental Impacts and Safety 

When considering major programs and threat categories our focus is on organizational wide issues (e.g., threats related to national parks in general, or asset management in general rather than with particular parks or a particular asset). Threats may be specific to a program area (i.e., lack information on ecological integrity, lack staff with key asset management skills) or they may be generic and cut across all programs (i.e., lack a robust information management system). All of the threats identified in the course of the risk assessment are known to managers in the organization and involve some response at national, regional or local levels to mitigate or control the potential impacts. In some cases, the Performance, Evaluation and Audit Group itself is involved in the management response.

Each inherent or gross threat is rated (low, medium, high) depending on the impacts the threat would have on the organization should it be realized, this is considered the threat's risk rating. Judgments of the severity of impacts on the organization involve simultaneous consideration of several different types of consequences including the extent of potential material or financial loss, impact on program operations, impact on reputation (e.g., negative media coverage), impact on the engagement of key stakeholders, visitors or the public, loss of historical or natural resources, and injuries or deaths. Judgments are complicated by the fact that consequences may be realized over different time periods (i.e., systematic loss of significant historical or natural resources over a long period vs. injuries to visitors in the short term). For the most part, judgments of consequences have focused on the near term (i.e., 1 to 5 years) rather than long term (i.e., 10 to 20 years).

An estimate is then made of the degree of control or mitigation of the threat within the organization (low, medium, high or weak, fair, good). Management efforts to control or mitigate threats include development of policies, plans and directives, assigning resources and roles and responsibilities for action, implementation of programs and activities, monitoring to see if the initiative or program is progressing as intended and overall review and evaluation in order to learn and improve in the future. Collectively, these actions can lessen either the extent of the possible threat and/or the severity of the consequence.

Management actions to control or mitigate threats usually leave some residual risks (i.e., likelihood that the unacceptable consequence will be realized despite the existence of mitigates). Residual risk was rated as low, medium, or high. An assessment of low residual risk means that the system to manage a threat is functioning well and/or the tolerance for the likely consequences is reasonably high. A moderate or medium residual risk level suggests that tolerance of the organization for the possible consequence is moderate to low and the management systems need monitoring in order to ensure that the possible residual risks are not realized. A high residual risk rating can mean either that management of the threat is weak or more likely that failure of the management strategies and approaches to deal with the threats is unacceptable (i.e., low risk tolerance).

A few examples can serve to illustrate the process. There are a number of inherent threats in managing a large assets base. These threats relate principally to the deterioration of the assets over time and the possible legal liabilities, issues with visitor and workplace safety and possibility of the loss of heritage places that can occur as a result of deterioration. Mitigating these threats requires periodic inspection, on-going maintenance and periodic capital expenditures. These activities are supported by adequate information management systems on the state of assets, costs of interventions, and compliance with inspection and monitoring standards. In Parks Canada, the threats related to limited resources to re-capitalize assets are well known as are limitations of the current asset information system and management framework. The Agency is currently seeking to strengthen its overall risk management framework for managing asset interventions, and improve its framework and systems for tracking and updating information on its assets. Because these management actions are not yet rolled out and because of the continued budget short fall we assessed the residual risk to assets as high.

The National Parks Act requires that a management plan for each park and national historic site be tabled in Parliament every five years. Due to capacity issues and the length of time it has historically required to develop or revise management plans, Parks Canada is not currently in compliance with the legislative timetable for tabling plans. Management plans have also been criticized for containing unrealistic commitments that can result in unfulfilled expectations threatening the Agency's relationship with its stakeholders. The Agency is currently working to better align management plans with resources, and improve the process to produce plans. As these process improvements are only beginning to be implemented we rated the current level of residual risk to the organization as medium.

Future Internal Audit and Evaluation Projects by Threats Categories and Programs

Past Internal Audit and Evaluation Projects by Threats Categories and Programs

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