Archived – Audit of the Academic Research Contribution Program

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Project Number 6B201
Final Audit Report
JANUARY 7, 2010

Table of Contents

List of Acronyms

ARCP
Academic Research Contribution Program
DFO
Fisheries and Oceans Canada
NSDC
National Science Directors Committee
PAD
Program Approval Documentation
SSI
Science Strategies and Integration Directorate

 

1.0 Executive Summary

1.1 Introduction

The Academic Research Contribution Program (ARCP) was created to promote academic partnering as a means to enhance Fisheries and Oceans Canada’s (DFO) scientific capacity and to deliver its mandate. The Program is managed by the National Science Directors Committee (NSDC), which is comprised of the most senior managers in the Science sector.

1.2 Objectives and Scope

The objective of the audit engagement was to provide assurance that the ARCP management control framework is adequate in relation to selection of recipients and administration of the contribution program. The engagement did not assess account verification processes; therefore it did not provide assurance related to payment compliance.

The ARCP Program Approval Documentation (PAD) expires on March 31, 2010 and requires an internal audit prior to renewal. Recently, the ARCP processes and outcomes were examined, in a management review sponsored by the sector (April 2008) and a DFO evaluation (September 2009). The scope of the audit was designed to avoid duplication with work previously undertaken.

1.3 Statement of Assurance

In our opinion, the auditors have examined sufficient, relevant evidence and obtained sufficient information and explanations to provide sufficient assurance on the reported opinion or conclusions.

1.4 Summary of Observations and Recommendations

The ARCP has an adequate management control framework in place for the selection and approval of recipients. Processes for the administration of the Program are mostly in place and will benefit from implementing formal risk management practices.

The ARCP has responded well to various recommendations resulting from the management review and the DFO evaluation. The Program has made significant improvements to its management control framework. The ARCP is well positioned for renewal in 2010-11 and implementation of the following recommendation will strengthen the management of the Program:

  • The Assistant Deputy Minister, Science should integrate formal risk management practices into its management of the Academic Research Contribution Program. (Medium significance)

2.0 Introduction

2.1 Background

The ARCP supports DFO science priorities by funding academic research to augment knowledge of oceans, aquatic resources and maritime safety. Funding is provided to recognized Canadian post-secondary institutions, research networks and individuals involved with at least one recognized Canadian post-secondary institution. The objectives of the Program are:

  • to enhance DFO’s capacity to deliver its mandate through scientific research as well as its ability to meet future scientific challenges in areas relevant to science program and priorities;
  • to leverage DFO’s science capabilities through the sharing of academic resources and knowledge;
  • to support research and development programs intended to promote innovation in marine, freshwater, fisheries, and aquaculture industry sectors; and
  • to work with academia towards realizing Canada’s full potential in marine, freshwater, fisheries, and aquaculture research by building linkages to support and enhance the complementary strengths of government, and universities in Canada’s innovation system.

2.1.1 Program Funding

The PAD allows for the annual transfer of $600,000 from Vote 1 (Operating) to Vote 10 (Grants and Contributions). In addition, the PAD contains a provision to annually transfer up to an additional $1,000,000 from Vote 1, if required. The ARCP does not have any additional cost implications and funds are sourced from existing reference levels. The following table summarizes the actual expenditures of the ARCP from 2004-05 to 2008-09.

 

2004/05 2005/06 2006/07 2007/08 2008/09 Total

 

($) ($) ($) ($) ($) ($)
Actual expenditures

0

250,000

489,000

679,000

838,000

2,256,000

2.1.2 Governance

There are three main components in the ARCP governance structure: the NSDC manages the ARCP; Regional Science Directors and Directors General deliver and monitor individual contribution agreements; and the Science Strategies and Integration (SSI) Directorate provides administrative support. The NSDC is comprised of the most senior managers of the Science sector and is chaired by the Assistant Deputy Minister, Science. NSDC approves applications, and addresses significant management issues. The ARCP has been a standing item at NSDC meetings since July 2008.

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2.2 Objectives and Scope

The objective of the audit engagement was to provide assurance that the ARCP management control framework is adequate in relation to selection of recipients and administration of the contribution program. The engagement focused on key controls in the context of the following two criteria:

  • There is a formal process in place to select and approve contribution recipients.
  • There are clear administrative procedures for the management of the Program.

The management review (April 2008) and the DFO evaluation (September 2009) examined the ARCP processes and outcomes. The following summarizes key observations:

  • The management review identified the need to enhance approval, monitoring and payment processes.
  • The DFO evaluation raised issues relating to selection of recipients and monitoring.

NSDC has responded positively to both the management review and the DFO evaluation. Sufficient time has not elapsed for full implementation of recommendations related to payment certification; therefore, this was excluded from the scope of the audit.

2.3 Methodology

The audit team carried out its engagement in accordance with the Government of Canada Internal Audit Standards, as set out in the Treasury Board Secretariat Policy on Internal Audit.  Key documentation was reviewed to develop an understanding of the Program (e.g. PAD, Risk-based Audit Framework and Results-based Management and Accountability Framework). The management review and the DFO evaluation, as well the processes implemented in response to the report recommendations, were analyzed. Program personnel were interviewed to understand key processes and to document their application.

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3.0 Observations and Recommendations

The ARCP has an adequate management control framework in place for the selection and approval of recipients.  Processes for the administration of the Program are mostly in place.  Implementing formal risk management practices will strengthen Program management.
 
To assist management in preparing its management action plan, the audit recommendation has been labeled according to the following three categories to reflect its degree of importance:

  • High significance – major control weaknesses and/or unacceptably high level of risk;
  • Medium significance – control weaknesses affecting operational efficiency and/or credibility; and
  • Low significance – control or process weaknesses contributing to inefficiency.

As the PAD expires March 31, 2010 and the Program is due for renewal, observations, recommendations, and the management action plan in this report have been developed to strengthen the Program.

3.1 Selecting and Approving Contribution Recipents

Strengthened selection and approval processes have been implemented.

To ensure transparency and fairness to all applicants, a contribution program should have processes in place to select and approve contribution recipients.

Prior to the DFO evaluation, the ARCP had an informal selection process in place. As well, there was an informal approval process in place prior to the management review.

The audit found evidence that the Program has implemented formal selection and approval processes. Utilizing a standard proposal template, applicants submit a proposal to Regional Science Directors or Directors General. In developing proposals, applicants may seek input from Regional Science Directors or Directors General. As required, SSI may also be called upon to provide advice on proposals. Utilizing the impact evaluation template, Regional Science Directors or Directors General assess proposals for impact on overall DFO science priorities. Applicant proposals as well impact evaluations completed by Regional Science Directors or Directors General are submitted to NSDC for approval. NSDC decisions are recorded in their records of decisions.

Recommendation:

  • As no major deficiencies posing significant risk to the Program were identified, no recommendation is required.

3.2 Managing the Program

The management control framework for the Program is effective and appropriate. Implementation of formal risk management practices will strengthen program administration.

To ensure compliance with terms and conditions of the Program, as well as policies and procedures for controlling transfer payments, administrative procedures should be in place for financial and non-financial monitoring.

In response to the management review, SSI developed a guide which included templates and administrative guidelines for managing ARCP contribution agreements. These were disseminated through NSDC in November 2008. The guide included a template for recipient reporting requirements for payment requests and a template for program managers to report results to NSDC. The guide is in use and is providing a standard for reporting and ensures consistency across the country.

The 2008 Treasury Board Secretariat Policy on Transfer Payments places an increased emphasis on strengthening accountability for public funds and managing programs in a manner that is sensitive to risk.

NSDC has strengthened its processes to ensure accountability for public funds.  However, the process for identifying risks, developing mitigation strategies and monitoring implementation of mitigation strategies is done on an ad hoc basis.  The Program would benefit from a more structured approach to risk management.

Recommendation:

The Assistant Deputy Minister, Science should integrate formal risk management practices into its management of the Academic Research Contribution Program, by documenting its assessment of risks from both likelihood and impact perspectives, identifying appropriate mitigation strategies, and ongoing monitoring. (Medium significance)

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4.0 Conclusion

The ARCP has an adequate management control framework in relation to selection of recipients and approval of contribution agreements. Processes for the administration of the Program are mostly in place.  Implementing formal risk management practices will strengthen Program management.

The ARCP has responded well to various recommendations resulting from the management review and the DFO evaluation. The Program has made significant improvements to its management control framework. The ARCP is well positioned for renewal in 2010-11.

5.0 Management Action Plan

Recommendation Management Action Plan Status Report Update
Actions Completed Actions Outstanding Target Date

The Assistant Deputy Minister, Science should integrate formal risk management practices into its management of the Academic Research Contribution Program, by documenting its assessment of risks from both likelihood and impact perspectives, identifying appropriate mitigation strategies, and ongoing monitoring. (Medium significance)

  • Review the Risk-based Audit Framework (RBAF) risk profile
  • Revise risk profile as required
  • Develop the appropriate risk mitigation measures in consultation with NSDC (National Science Directors Committee)
  • Develop risk management practices and implement

 

 

March 2010