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Internal Audit Report

Environmental Management Framework Audit

Project 2013-6B261

Final Report

Date: June 6, 2014

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TABLE OF CONTENTS

1.0 EXECUTIVE SUMMARY
2.0 BACKGROUND
3.0 AUDIT OBJECTIVE
4.0 AUDIT SCOPE
5.0 AUDIT APPROACH
6.0 AUDIT FINDINGS
7.0 AUDIT OPINION
8.0 STATEMENT OF ASSURANCE
APPENDIX A — AUDIT CRITERIA

1.0  EXECUTIVE SUMMARY

Fisheries and Oceans Canada is committed to developing and implementing a National Environmental Management System for Fisheries and Oceans Canada Operations and Assets (National Environmental Management System) to manage and improve environmental performance in support of the environmental commitments of the Department.  The decision to develop and implement a National Environmental Management System was made by the Departmental Management Board in October 2011. 

An environmental management system is an organized and formal approach to managing environmental issues within an organization, and as such, the National Environmental Management System can be characterized as the environmental management framework component of the Department’s overall management framework.  The stated intent of the National Environmental Management System is to integrate existing management systems and procedures to the extent feasible, while setting national goals and maintaining national consistency.  Its scope will encompass all custodians and sectors within the Department and the Canadian Coast Guard.  The National Environmental Management System is being developed and implemented over a five year time horizon and is expected to be substantially complete by the end of fiscal year 2015-2016.  Supporting Regional Systems and components are expected to be in place by 2017-18.

The audit objective was to provide assurance that the National Environmental Management Framework is structured in such a way that it includes the appropriate governance, accountability and organizational structures, along with supporting elements, to ensure effective and efficient environmental management of departmental operations and assets.

Based on the audit findings, the conclusion is that, overall, the National Environmental Management Framework including the National Environmental Management System currently being implemented, include the appropriate governance, accountability and organizational structures to ensure effective and efficient environmental management of departmental operations and assets.  However, opportunities were identified where improvements should be made and actions taken to: enhance governance and oversight by senior management committees; further strengthen the accountability framework for environmental management; address gaps identified in key supporting elements and process of the framework; and, minimize any risk to the efficient, effective and timely development and implementation of the National Environmental Management System currently in progress.

Given the collective responsibility for environmental management within the Department, it is recognized that the implementation of the following recommendations will require the engagement of senior management committees, as well as individual sectorial and custodial senior managers who have been assigned responsibilities within the Department’s accountability framework for environmental management. The recommended improvements and actions are as follows:

  • Enhance the functioning of the committee structure for oversight of environmental management.  Actions that would strengthen the committee structure and enhance oversight include the following:

For departmental Senior Management Committees:

  • Identification of the process and information requirements needed to support environmental management as a standing agenda item on the Department’s senior management committees (Deputy’s Management Committee and Directors General Management Committee).  The frequency in which this item would appear would consider the level of risk and need for oversight to ensure that the Department fulfills its collective responsibilities for achieving, in an effective and efficient manner, the objectives and targets defined within its National Environmental Management System.

For National Environmental Management Committee:

  • Formalizing the Committee's obligations for regular reporting to the Department’s senior management committees;
  • Integrating more senior level management participation and establishing minimum quorum requirements; and,
  • Tracking and distribution of action items and their completion and clearly linking these to updated forward agendas of the committee.
  • Strengthen the overall environmental management accountability framework in the Department by ensuring that:
    • The mandate of the Office of Environmental Coordination and the respective regional offices is clearly and consistently communicated across the department.
    • Roles, responsibilities and authorities of senior management committees with respect to environmental management are clearly identified, documented, and communicated to all participants.
    • Sector heads and senior custodial managers are advised that the roles and responsibilities specific to environmental management should be defined and communicated to operational level managers and staff that undertake significant environmental management activities within their respective organizations.
  • Ensure that the following key elements and supporting processes of the National Environmental Management System are fully developed and implemented in a timely manner:
    • Objectives and targets for all significant environmental aspects and/or key management activities are defined in a sufficient level of detail at the departmental, sectorial and custodial level to allow for meaningful performance measurement.  Therefore, further enabling the Department to assess, monitor, and report on the results that are being achieved through its environmental management activities.
    • A comprehensive training strategy and program that systemically identifies the training needs and effectively coordinates training activities across the Department.
  • In an effort to achieve consistency and efficiency in the realization of the National Environmental Management System, consultations need to be conducted on a regular basis during implementation, involving all custodians and the Offices of Environmental Coordination (national and regional). Consultations would clarify and confirm expectations that while multiple environmental management systems may co-exist within the National System, the National EMS sets the minimum standard for environmental management for the Department.

Management Response

Management is in agreement with the audit findings, has accepted the recommendations included in this report, and has developed a management action plan to address them.  The management action plan has been integrated in this report.

2.0 BACKGROUND

Fisheries and Oceans Canada is committed to developing and implementing a National Environmental Management System for Fisheries and Oceans Canada Operations and Assets (National Environmental Management System) to manage and improve environmental performance with a focus on environmental regulatory compliance.  The decision to develop and implement a National Environmental Management System was made by the Departmental Management Board in October 2011. 

An environmental management system is an organized and formal approach to managing environmental issues within an organization. To this end, the environmental management system can be thought of as a specialized component of an organization’s overall management framework that focuses on environmental issues.  The International Organization for Standardization, as the largest developer of voluntary International Standards, has developed Standard ISO 14001 - Environmental Management Systems.  The Standard outlines the requirements of an environmental management system that an organization needs to meet in order to obtain certification by the International Organization for Standardization.  Fisheries and Oceans Canada has decided to develop and implement its environmental management system consistent with the requirements of ISO Standard 14001 but without seeking certification. 

The Department’s Environmental Policy Statement notes that all members of the Department’s senior management and all managers are accountable for achieving the common goal of effective environmental management and compliance in relation to all environmental laws and regulations.  Within this context, the Assistant Deputy Minister – Human Resources and Corporate Services is accountable for developing and implementing the Department’s National Environmental Management System, as well as providing functional direction and strategic advice across the Department on environmental management, compliance, monitoring and reporting.

The Department’s National Environmental Management System is being developed as a means of providing consistent direction to all employees on how specific environmental issues should be managed within the department.  Accordingly, the intent of the National Environmental Management System is to integrate existing management systems and procedures to the extent feasible, while setting national goals and maintaining national consistency.  As a result, the National Environmental Management System will encompass all custodians and sectors within the Department and the Canadian Coast Guard. 

The National Environmental Management System is being developed and implemented over a five year timeframe and is expected to be substantially complete by the end of the 2015-16 fiscal year.  Supporting Regional Systems and system components are expected to be in place by 2017-18.

3.0 AUDIT OBJECTIVE

The objective of the audit was to provide assurance that the National Environmental Management Framework was structured in such a way that it includes the appropriate governance, accountability and organizational structures, along with supporting elements, to ensure effective and efficient environmental management of departmental operations and assets.

4.0 AUDIT SCOPE

The scope of the audit was risk-based and focused on the management framework in place between April 2012 and March 2014 and the supporting elements and processes currently being developed and implemented as part of the National Environmental Management System.

5.0 AUDIT APPROACH

The examination phase of this audit engagement commenced in January 2014 and concluded in March 2014.  The audit team carried out its mandate in accordance with Treasury Board’s Policy on Internal Audit and the Internal Audit Standards for the Government of Canada.  The audit employed various techniques including a risk assessment of the audit entity, interviews, as well as reviews and analysis of documentation and information.

6.0 AUDIT FINDINGS

It is acknowledged that within the context of the Department’s Environmental Policy Statement that all managers are collectively responsible for environmental management.  That being said, within the Department’s accountability structure for environmental management, the Assistant Deputy Minister – Human Resources and Corporate Services is responsible for the development and implementation of the Department’s National Environmental Management System.  To this end, the observations and recommendations that have resulted from the audit work are presented in consideration of the Department’s accountability structure for environmental management.

While the audit was conducted based on the lines of enquiry and audit criteria identified in the planning phase, this report is structured along the following main themes:

  • Oversight by Senior Management Committees;
  • Accountability and Organizational Structure;
  • Supporting Elements of the Environmental Management Framework; and,
  • National Environmental Management System Implementation

For conclusions by audit criterion, please refer to Appendix A.

Based the audit work performed and our professional judgment, the risk associated with each observation was rated using a three-point scale. The risk ranking (high, moderate, low) is based on the level of potential risk exposure we feel may have an impact on the achievement of Fisheries and Oceans Canada objectives, and is indicative of the priority Management should give to the recommendations associated with that observation. The following criteria were used in determining the risk exposure level:

Criteria Table
High Controls are not in place or are inadequate.
Compliance with legislation and regulations is inadequate.
Important issues are identified that could negatively impact the achievement of program/operational objectives.
Moderate Controls are in place but are not being sufficiently complied with.
Compliance with central agency/departmental policies and established procedures is inadequate.
Issues are identified that could negatively impact the efficiency and effectiveness of operations.
Low Controls are in place but the level of compliance varies.
Compliance with central agency/departmental policies and established procedures varies.
Issues identified are less significant but opportunities that could enhance operations exist.

6.1 Governance - Oversight by Senior Management Committees

The Treasury Board Secretariat's Audit Criteria related to the Management Accountability Framework notes that a department’s governance-related objectives are enabled by the collective suite of management processes and controls that are in place to set strategic direction, operational plans, objectives and priorities and to provide clear direction on how resources should be allocated to achieve these plans.  The presence of an oversight body is important to ensure that management’s direction, plans and actions are appropriate and responsible.  Oversight bodies should be provided with timely and accurate financial and operating information in order to fulfill their oversight function. Resource allocation and budgets includes financial, human and physical resources.  These are critical elements of a control framework as they define the required resources and competence, and serve to ensure that sufficient resources exist to meet the objectives of the entity.

Observations Section 6.1
Observations
Low

6.1.1 A senior management committee structure has been put in place; however, the committees have not been providing effective oversight over environmental management.

National Committees

During the period covered by the audit, a senior management committee structure was in place at the national level with the capability to exercise an oversight function over environmental management. This committee structure was composed of two senior management committees: the Departmental Management Board and the Strategic Outcome Committee-Integrated Business Management that included participation by sector Assistant Deputy Ministers and Regional Directors General.  It was noted during the examination phase of the audit that the senior management committee structure of the Department had been amended.  The Departmental Management Board has been replaced with the Deputy’s Management Committee, the Strategic Outcome Committee-Integrated Business Management has been discontinued, and a new Director General Management Committee has been created to support the Deputy’s Management Committee.

In addition to the two senior management committees, a Director level committee, the National Environmental Management Committee, has been active since late 2011 with a mandate to provide national guidance/direction and oversight on the development, implementation and continual improvement of environmental management for Departmental operations and assets.

Although a formal Committee structure was identified, the audit determined that the senior management committee structure had not functioned in a manner that demonstrates that adequate oversight over environmental management has been effectively exercised by the committees.  It was established, through interviews and documentation review, that environmental management was not a standing item, at any frequency, on the meeting agendas of the senior management committees, and that the senior management committees had not provided any direction to the National Environmental Management Committee regarding what information they required to exercise their oversight function.  On those occasions where environmental issues were brought to the attention of senior committees, it was for information purposes only or for requesting approval of documents or procedures, and was primarily initiated at the discretion of the Office of Environmental Coordination.

Interviews and documentation review also established that for the period examined by the audit, the National Environmental Management Committee has functioned primarily as an information sharing forum, rather than one that provides guidance / direction on environmental management and effective oversight over the development of the National Environmental Management System.

Review of committee minutes determined that attendance by director level positions at National Environmental Management Committee meetings did not reflect the membership identified in the Committee's Terms of Reference. Furthermore, the attendance by this level was inconsistent and calls into question the value and role these members play in fulfilling the Committee's mandate.  In addition, committee meeting summaries did not demonstrate the extent of discussion or resolution of many of the Committee's agenda items.  There were also weaknesses identified in the identification of agenda items (i.e. whether they were for discussion/information, action or decision) and in the process for tracking, distribution and follow-up of action items to their completion.

Regional Committees

Interviews revealed that, with the exception of the Pacific region, there was no formal integration of environmental management at the senior regional management boards or supporting committees, as a management best practice.  Most regions, integrated discussions on environmental management at their senior regional management board level on an ad hoc basis without a formal process for addressing and reviewing regional environmental management objectives, planned activities, targets and results (oversight) in a systematic manner.

As previously noted, environmental management is a shared responsibility within the Department that involves a number of sectors and custodians, and includes a large portfolio of diverse assets and operations that interact with the environment.  As such, the engagement of senior management committees in exercising adequate oversight constitutes a key control in ensuring the alignment of environmental management activities with departmental priorities and the effective and efficient use of resources.

Recommendations / Managment Action Plan
Recommendation Management Action Plan
  • R-1. As the Center of Expertise for Environmental Management within the Department, the Assistant Deputy Minister, Human Resources and Corporate Services should take steps to enhance the functioning of the committee structure for oversight of environmental management. Actions that would strengthen the committee structure and enhance oversight include the following:

For departmental Senior Management Committees:

  • Identification of the process and information requirements needed to support environmental management as a standing agenda item on the Department’s senior management committees (Deputy’s Management Committee and Directors General Management Committee).  The frequency in which this item would appear would consider the level of risk and need for oversight to ensure that the Department fulfills its collective responsibilities for achieving, in an effective and efficient manner, the objectives and targets defined within its National Environmental Management System.

For National Environmental Management Committee:

  • Formalizing the Committee's obligations for regular reporting to the Department’s senior management committees;
  • Integrating more senior level management participation and establishing minimum quorum requirements; and,
  • Tracking and distribution of action items and their completion and clearly linking these to updated forward agendas of the committee.
  • The Assistant Deputy Minister, Human Resources and Corporate Services will collaborate with the Assistant Deputy Minister, Strategic Policy to integrate routine review of environmental management issues at the Directors General Management Committee and the Deputy’s Management Committee on a semi-annual basis including:
    • A spring presentation to highlight program priorities (including objectives) for the coming fiscal year; and
    • A fall review of departmental environmental performance.
  • With respect to roles and responsibilities of the National Environmental Management Committee:
  • In line with the Management Action Plan item above, the National Environmental Management Committee members will pursue reporting to senior management using the departmental reporting structure noted above, and consult with the regions within their organizations as per the Terms of Reference for the National Environmental Management Committee.
  • The Terms of Reference for the National Environmental Management Committee will be revised to establish minimum quorum requirements, confirm director-level of membership, and clarify the roles of committee members.
  • The tracking and completion of action items in the Committee’s Records of Decision will be formalized and documented.
Office of Primary Interest: The Assistant Deputy Minister, Human Resources and Corporate Services
Due Date:
  • Directors General Management Committee and the Deputy’s Management Committee: By fiscal year 2015/16
  • National Environmental Management Committee:  By March 2015

(Note: The aforementioned dates will ensure changes have been implemented at the beginning of the new business cycle).

6.2 Accountability and Organizational Structure

The Treasury Board Secretariat's Audit Criteria related to the Management Accountability Framework notes that, accountability is the duty to report on the fulfillment of one’s responsibility.  As such, a key control or enabler of accountability is an appropriate organization structure that clarifies authorities, responsibilities, and the duty to report.  This requirement is also reflected in guidance provided by the International Organization for Standardization which indicates that the establishment of clear, documented roles, responsibilities and authorities is an essential component of an Environmental Management System.

The broad scope of the Department's environmental management activities which cut across sectors, custodians, and regions, as well as the Department's matrix management model dictate that a clear delineation of accountabilities and responsibilities at the appropriate levels of management, and for key positions and organizational units within the environmental management structure be established.

Observations Section 6.2
Observations
Low 6.2.1 The Department's Environmental Management Accountability Framework for Operations and Assets has been updated and is awaiting final approval.  The framework adequately documents the accountabilities and responsibilities at a high level. There are however, a number of areas where the framework needs to be strengthened to operationalize and reinforce the accountabilities for results by key stakeholders and oversight committees.

Overall Accountabilities and Responsibilities:

Accountabilities, as well as management roles and responsibilities related to the Department's environmental management were defined in the Environmental Management Accountability Framework for Operations and Assets document.

The document, which had not yet been approved at the time of the audit, is an update of an existing framework document that was originally approved in 2005.  Development of the updated version was a result of a comprehensive process of consultations that included legal services and input from all custodians. The revised version represents an overarching framework and is intended to clarify at the senior management level,  roles, responsibilities and accountabilities for environmental management throughout the department. 
Review of the document established that, overall, the assignment of accountabilities and responsibilities within the revised framework reflected those identified within the Department's matrix management model.  Accountability has been assigned to senior management positions within sectors with significant environmental responsibilities for operations and assets, with ultimate accountability for environmental management resting with the Deputy Minister.  Responsibility has been assigned to director and manager level positions throughout relevant organizational units that have a significant role in undertaking and managing environmental management activities.

Primary accountability for overall functional direction and the provision of advice related to environmental management is assigned to the Assistant Deputy Minister, Human Resources and Corporate Services.  The Office of the Environmental Coordination within the Human Resources and Corporate Services Sector has been assigned responsibility for the development and implementation of the National Environmental Management System.  Finally, specific organizational units and positions have also been identified as responsible for the provision of functional authority within their respective sectors (i.e. Canadian Coast Guard and Small Craft Harbours).

Although the accountabilities and responsibilities have been defined within the context of the Department's matrix management model, the document review and interviews established, however, the role and responsibilities of senior management committees with respect to environmental management have not been defined.  For example, it was determined while certain documents or procedures have been presented to senior management committees for approval and/or information purposes, others have not.  The parameters and process for categorizing the documents (i.e. for approval vs. for information) have also not been formalized.

It was also determined that responsibilities and accountabilities for setting environmental management objectives and targets, at any level within the Department (i.e. departmental, sectorial, custodial, or regional), have not been formally assigned.

Understanding and Acknowledgement of Roles, Responsibilities and Accountabilities:

Interviews with key stakeholders, whose positions have been specifically identified in the revised accountability framework document, revealed that these stakeholders were generally well aware of the document and of their respective roles, responsibilities and accountabilities.  However, interviews also identified that for certain regional stakeholders who have significant roles in the region's environmental management activities, there was a need to further develop, document and communicate the roles, responsibilities and related guidance for positions at the operational or working level.  It was stated that roles and responsibilities for environmental management did not exist or where they existed, they were not specific enough for the environmental management activities or were outdated.

Mandate of the National Office of Environmental Coordination:

Based on interviews and document review, it was determined that the mandate of the Office of Environmental Coordination has not been clearly communicated.

Interviews revealed that it was not always clear what environmental aspects and/or related environmental management activities the Offices of Environmental Coordination (national and regional) were taking the lead on, versus what was expected from the sectors or custodians.  It was also stated that the level of involvement by Regional Offices of Environmental Coordination in terms of the type of activities and/or the level of services provided, varied by region and/or the custodian.

Review of the Department's Intranet site for the National Office of Environmental Coordination confirmed that the mandate of the National Office may not be clear to departmental readers.  The information published on the site regarding the mandate and role of the National Office is confusing.   It does not clearly communicate the role of the National Office as a functional / advisory body or one that has operational responsibilities, or the extent to which the National Office exercises both these roles.

Strengthening the accountability framework in the above noted areas would clarify, operationalize and reinforce accountabilities for results by key stakeholders and oversight committees.  This would reduce the risk that the responsibilities and accountabilities for environmental management within the Department may be misunderstood or become obscured resulting in the following:

  • important EM issues, including key items for requiring review and approval, are not brought to the attention of senior committees;
  • EM activities undertaken are not appropriately aligned with departmental risks, priorities and available resources;
  • non-compliance to legal and other requirements;
  • ineffective and inefficient operations; and,
  • Insufficient awareness of the importance of environmental management.
Recommendations / Managment Action Plan
Recommendation Management Action Plan
  • R-2.  As the Center of Expertise for Environmental Management within the Department, the Assistant Deputy Minister, Human Resources and Corporate Services should take steps to strengthen the overall environmental management accountability framework in the Department by ensuring that:
    • The mandate of the Office of Environmental Coordination and the respective regional offices is clearly and consistently communicated across the department.
    • Roles, responsibilities and authorities of senior management committees with respect to environmental management are clearly identified, documented, and communicated to all participants.
    • Sector heads and senior custodial managers are advised that the roles and responsibilities specific to environmental management should be defined and communicated to operational level managers and staff that undertake significant environmental management activities within their respective organizations.
  • The Environmental Management Accountability Framework (approved April 17, 2014) clearly defines the mandate of the Office of Environmental Coordination and the respective regional offices. This will be widely communicated within the department by the end of July 2014 including:
    • A memo to members of the Deputy’s Management Committee and their respective organizations;
    • Website updates; and
    • In-the-Loop messages (national and regional).

These communication activities will highlight the roles and responsibilities and authorities that make up the Department’s accountability structure for Environmental Management.

  • As part of the integration into the senior management committee structure, a presentation to the Directors General Management Committee and the Deputy’s Management Committee will be conducted by March 2015, to remind members of their roles and responsibilities.
  • The memo to Deputy’s Management Committee communicating the Environmental Management Accountability Framework will emphasize the requirement to ensure that all employees are made aware of their responsibilities related to environmental management of operations and assets.
Office of Primary Interest: The Assistant Deputy Minister, Human Resources and Corporate Services
Due Date: By March 2015

6.3 Supporting Elements of the Environmental Management Framework

As previously stated, Fisheries and Oceans Canada has decided to develop and implement its Environmental Management System consistent with the requirements of the International Organization for Standardization Standard ISO 14001, without seeking certification.  To fulfill this commitment a five year implementation plan has been prepared based on the requirements of Standard ISO 14001, and is in the process of being implemented.

To successfully adopt and implement the requirements of Standard ISO 14001 within the Department, it was anticipated that the environmental management practices developed and implemented to govern over the Department's portfolio of assets and operations would be designed and performed in a manner that is consistent with other management practices operating within the department.  Specifically, pursuant to a framework that: clearly defines an overall mandate and related goals; can be implemented to achieve those goals; and includes the key elements of planning, implementing, monitoring, measuring and checking; and, review and feedback.

Observations Section 6.3
Observations
Low

6.3.1 At the time of the audit, the Department of Fisheries and Oceans Canada was entering into the fourth year of its five year implementation plan for the National Environmental Management System.  Certain key foundational elements of the System were found to be in place; however, there were others that were found to be in various stages of completion or have been identified as items for future development / implementation as milestones in years four or five of the plan.

An examination of the key foundational elements of the System that have been developed revealed that there were weaknesses in certain of the supporting processes that are needed to ensure the success of the System.

Objectives, Targets and Performance Measurement:

As a part of the documentation review it was noted that a logic model and related performance measurement framework was developed by the National Office of Environmental Coordination in March 2012.  The model and performance framework formed part of the basis for the first annual National Environmental Performance Report, along with a five-year retrospective review of results under the National Environmental Compliance Audit Program, which was presented to members of the Departmental Management Board in December 2013.   Thereafter, monthly Environmental Compliance Report Cards were issued DMB members to track completion of Management Action Plans for any outstanding audit findings.

Analysis of the logic model and the performance measurement framework found that the logic model states that the National Office of Environmental Coordination has the least amount of control over the realization of final outcomes and acknowledged that the National Office holds departmental expertise in certain areas, including contaminated sites and environmental compliance.   Consequently, the logic model identifies two final outcomes that can be measured as: reduced departmental liabilities related to contaminated sites; and reduced departmental environmental violations/ enforcement actions.  Further review of the targets / metrics and dates that were provided for these final outcomes, determined that targets and metrics were not detailed enough, and that the target dates were not adequately defined to facilitate meaningful performance measurement.   It is acknowledged that the performance measurement framework is evolving through the implementation of the Environmental Management System.  As such, it anticipated that upon completion of the Department’s Environmental Management System there will be further integration of the performance objectives, targets, metrics, and target dates for all significant environmental aspects that are to be managed, and at the appropriate level of detail.

It was noted that the Pacific region, has a robust operational performance measurement framework that includes specific metrics and targets for outputs related to environmental management activities, as well as a formal process in place for reporting on the results of its Environmental Management System and related activities to regional senior management.

A comprehensive performance measurement framework that includes a process for the establishment of adequately detailed environmental objectives and targets at the departmental, sectorial and custodial levels will further enable the Department to provide a holistic picture in terms of its overall environmental performance, as well as assess the results being achieved.

Guidance and Training:

Review of the Environmental Management Accountability Framework for Operations and Assets document found that accountability and responsibility for ensuring the required mandatory training is provided to employees is assigned to sector heads and their delegates.  The Assistant Deputy Minister, Human Resources and Corporate Services, is assigned accountability for developing and implementing mandatory training programs that promoted environmental awareness and compliance, and the national and regional Offices of Environmental Coordination are specifically responsible for the development and delivery of these programs.

A review of the intranet site for the National Office of Environmental Coordination found that general awareness training was provided.  It was also confirmed through interviews that support materials were being developed and training was being delivered to custodians by the Regional Offices of Environmental Coordination.

However, interviews with regional stakeholders established that training was not being delivered on a consistent basis across the regions or to the custodians.  Regional stakeholders identified a need for the National Office of Environmental Coordination to set training standards to ensure consistency of delivery.

Interviews also confirmed that, although a robust compliance monitoring program has been implemented, there was no formal analysis and process at the national level that links root causes of compliance findings to the development of appropriate training programs, to ensure that the mandatory requirements for training, by environmental aspect or for specific positions, are established and implemented.

Finally, review of annual work-plans of the Regional Offices of Environmental Coordination found that training programs were being funded, developed and delivered independently in each region for the same environmental aspects.  These independent training initiatives increase the risk of duplication, inefficiencies, and inconsistencies.

The absence of a formal training strategy at the national level that systemically  identifies the training requirements and coordinates the related activities, increases the risk that training activities will not focus on the areas of greatest need, and may result in a duplication of effort and related inefficiencies in the use of available resources.

Monitoring and Measurement:

Interviews and documentation review confirmed that a robust monitoring process has been established and implemented to assess compliance to regulations. This was accomplished primarily through the external National Environmental Compliance Audit Program, whereby audits at facilities were conducted by certified environmental auditors external to the department.

Processes and procedures were in place for the selection of sites, the conduct of the audits, and the reporting of the results, including the status of corrective actions.  For those sites not included in the external National Environmental Compliance Audit Program, the National Office of Environmental Coordination has developed and implemented an internal audit/assessment process and procedures to assess compliance at other sites where environmental risks may be present.  The administration of the process and procedures were performed by staff within each of the Regional Offices of Environmental Coordination.

Interviews and documentation review further determined that a monitoring process has also been developed for the management of storage tanks as part of the Storage Tank Environmental Management Plan.  Information gathered through this monitoring process was analyzed and reported by the National Office of Environmental Coordination to custodians in 2012 and 2013.

However, as previously stated, specific objectives and targets have not been identified for certain significant environmental aspects because respective Environmental Management Plans have not yet been developed.As a result, for the period under examination, the Department was not in a position to adequately monitor its progress and fully assess performance in terms of its management of the environmental aspects it deemed to be significant.

Finally, a process to guide the monitoring of conformance to the National Environmental Management System and to assess whether the System was being properly implemented and maintained by regional and custodial stakeholders has not been developed; however, it has been identified as a key milestone on the System's five year implementation plan.

An incomplete monitoring and measurement process for the Department's National Environmental Management System increases the risk of the Department being unable to gather information required to assess the performance of its management activities and practices for all environmental aspects and the extent to which its commitments are being met; and, to determine what adjustments, if any, may be required.

Senior Management Review:

As a step toward initiating the Senior Management Review of the National EMS, the National Office of Environmental Coordination shared its first annual departmental Environmental Performance Report with members of the Departmental Management Board in December 2013.  In addition, the Report contained information on the Department's accomplishments related to the Federal Sustainable Development Strategy, the Contaminated Sites Program, and a very comprehensive section outlining the results of the external National Environmental Compliance Audit Program for the period of 2007 - 2012.  Thereafter, monthly Environmental Compliance Report Cards were issued to DMB members to track completion of Management Action Plans for any outstanding National Environmental Compliance Audit Program audit findings.  The report, however, did not include sufficient detail by environmental aspect to provide a meaningful assessment of the Department's progress towards its goals, because the related performance targets have not been defined to an adequate level of detail.

It was also determined that the 1st Annual Environmental Performance Report was shared with members of the Departmental Management Board for information purposes and was not distributed in a formal forum that encouraged an open and  meaningful discussion, among senior management.  Such a discussion would be expected to take place from a strategic direction and decision making perspective and would include environmental performance results; the progress on the development and implementation of the National Environmental Management System (including risks and challenges faced), recommendations for improvement, and / or confirmation of the way forward.  A formal process for senior management review, including documentation of results; decisions; and, related feedback, is a strong control over environmental management, enhances accountability at all levels, and is consistent with the requirements of the ISO 14001 Standard for environmental management, and is scheduled to begin in the final year of development of the National EMS.

The Office of Environmental Coordination stated that the Departmental Environmental Performance Report referred to above was the first such comprehensive report to the Departmental Management Board and that based on feedback, the process, format and content for future reporting can be updated to better reflect senior management’s information needs for departmental decision making.

Documentation and Document Control:

Interviews and documentation review determined that there was no formal process to manage the documentation related to the National Environmental Management System.The approach that was adopted was to place developed documentation on the Department's intranet site of the National Office of Environmental Coordination. Review of the site found that some documents included in a National Environmental Management System such as, plans, procedures, training modules, etc., were published on the site.  The site, however, was not organized or structured in a manner that clearly demonstrated all key elements of the environmental management system, those completed and those in progress or contemplated.Furthermore, a formalized procedure that outlines the documentation control processes that are needed to control the review, approval and revision of key documents to be included in the National Environmental Management System, had not yet been developed.

The absence of a formalized process for the development, review, approval and maintenance of key environmental management documentation increases the risk that incomplete and / or outdated documents may be used by departmental users. Furthermore, access to the proper documentation may be untimely.

Recommendations / Managment Action Plan
Recommendation Management Action Plan
  • R-3. To fulfill the Department's commitment to implement an Environmental Management System consistent with Standard ISO 14001 - Environmental Management Systems, the Assistant Deputy Minister, Human Resources and Corporate Services, should ensure that the following key elements and supporting processes of the National Environmental Management System are fully developed and implemented in a timely manner:
    • Objectives and targets for all significant environmental aspects and/or key management activities are defined in a sufficient level of detail at the departmental, sectorial and custodial level to allow for meaningful performance measurement.  Therefore, further enabling the Department to assess, monitor, and report on the results that are being achieved through its environmental management activities.
    • A comprehensive training strategy and program that systemically identifies the training needs and effectively coordinates training activities across the Department.
  • As part of the original project delivery plans for the National Environmental Management System for Operations and Assets, objectives and targets for all significant environmental aspects will be outlined within the completed Environmental Management Plans (EMPs) according to the schedule within the National Environmental Management System Implementation Plan.
  • A national environmental management training strategy will be completed by October 2014.
Office of Primary Interest: The Assistant Deputy Minister, Human Resources and Corporate Services
Due Date:
  • Development of key components consistent with the National EMS Implementation Plan: By March 2016
  • Completion of National Training Strategy: By October 2014

6.4 National Environmental Management System Implementation

The Department’s decision to adopt and implement a National Environmental Management System consistent with the requirements of the International Organization for Standardization's Standard ISO 14001 is a major undertaking.   The nature and scope of the project are complex and comprise a number of aspects of environment management that are intended to apply across the Department and include all regions, departmental sectors, and the Canadian Coast Guard.

To ensure the efficient and effective development of a National Environmental Management System, it was anticipated that a strong project management approach would be employed by the National Office of Environmental Coordination.   Such an approach would include such key elements as: options analysis; project alignment with needs; clarity of project definition; impact on organization and resources; senior management support; and, adequate communications and monitoring of project progress.

Observations Section 6.4
Observations
Low

6.4.1 A National Environmental Management System Implementation Plan has been developed and identifies the National Office of Environmental Coordination as the primary stakeholder assigned responsibility for the development and implementation of the system with support from the Regional Offices of Environmental Coordination and the departmental custodians.   However, full development and implementation of the System including Regional systems and components, are not expected until fiscal year 2017-18.

Finally, gaps have been identified in the definition and integration of the System’s components, as well as in the implementation process and coordination of related efforts.  These gaps pose a significant risk to the successful implementation (i.e. efficiency and timeliness) of the System, as well as its ongoing maintenance.

Environmental Management System definition and alignment with needs:

In seeking support for the establishment of the Department's Environmental Management System, an Overarching Strategy for Environmental Management was presented to the Departmental Management Board in June 2011.  This presentation underscored the importance regarding the Department's need for the System by focusing exclusively on the management of compliance related risks. The presentation, however, did not provide sufficient information related to: the scope and specific objectives (notwithstanding risk management related to compliance to regulations); costs and other resource requirements; project risks, challenges and constraints; or options for consideration.

The International Organization for Standardization's guidance for an Environmental Management System stated that an essential first step in developing a System is to determine how the organization is performing environmentally, and how the existing programs, practices and procedures of the organization measure up to the System standard being considered.  Related guidance also advises that when implementing an environmental management system, the premise should not be that the System is something totally new to the organization and, that those processes that are not essential for improving organizational environmental performance should not be put in place simply for conformance to the standard.

Results of a benchmarking exercise undertaken as part of the audit determined that in implementing Environmental Management Systems, one of the challenges other departments faced was buy-in and engagement by stakeholders within the organization.  Although the reason for this was not specifically identified through the benchmarking exercise, it would be reasonable to expect that the added work load related to the system may have been a contributory factor.  This was supported by the comments received from one respondent, who stated that prior to a single Environmental Management System being developed for the department, there existed various regional systems but the workload was too onerous for the department to maintain them.

Interviews and documentation review established that, as part of defining the requirements for the Department's National Environmental Management System, a gap analysis was undertaken by the National Office of Environmental Coordination to assess the extent to which existing systems, practices, and procedures conformed to the applicable elements of the International Organization for Standardization's guidance for an Environmental Management System.  On the basis of this assessment a five year implementation plan was developed for the System.  The plan included as key milestones, the development and / or update of regional environmental management systems and also made reference to custodial Systems.

It was determined, however, that the gap analysis undertaken by the National Office of Environmental Coordination did not review or assess in depth the custodial, sectorial or regional environmental management systems and processes that were in place.  Interviews with regional and custodial representatives responsible for environmental management revealed that in some cases their environmental management systems or components thereof have existed in some form or other, for some time and it is not clear to them how their systems are to coexist within the National Environmental Management System. Interviews with key stakeholders revealed that there have been two earlier attempts to implement an Environmental Management System within the Department that were subsequently abandoned (one at the national and one at a regional level). The key reason provided for abandoning

the initiatives in each case was that the systems developed/proposed were too complex and cumbersome to be adequately implemented and/or maintained on an ongoing basis.

Interviews further revealed that, for the period examined by the audit, the development of environmental management plans for specific environmental aspects has required a considerable amount of time and effort.  Given the manner by which many of the environmental aspects have been characterized within the System, it was anticipated that every effort would be made to identify opportunities to minimize the development effort, as well as the proliferation of documentation. For instance, despite the regional differences that may exist, it would be reasonable to expect, for example, that the environmental management practice for storage tanks or halocarbons would not differ or vary that much, if at all, to require the development of different environmental management plans.  Interviews with some key stakeholders confirmed this assessment, as they did not see a need for the duplication or the multiple layers of documents being produced within the System(s).

Environmental Management System Implementation and Coordination:

As noted earlier, the Environmental Management System Implementation Plan included the development of regional environmental management systems as key milestones.  Interviews confirmed that regions intend to develop their own systems and environmental management plans based on the National Environmental Management System.  The Implementation Plan also made reference to environmental management systems to be developed by custodians.  From a regional perspective, as mentioned earlier, the Pacific region already has a functional environmental management system in place. From a custodial perspective, the Small Craft Harbours Directorate has also recently completed its own environmental management system that is awaiting approval.  The Canadian Coast Guard has its Safety and Security Manual that addresses environmental compliance for its fleet, and was in the process of developing a similar system for its shore side assets and operations.

At the time of the audit, two of the four regions that do not yet have a functional environmental management system, had provided plans to the National Office of Environmental Coordination for implementation of their regional systems.  The plans included a list of milestones for implementation of the systems over a four year time horizon ending in 2017-18.  Review of these regional implementation plans, found that the list of milestones varied in length and detail provided.  For example, one region's implementation plan identified as a milestone the development of regional objectives, targets and measures whereas the other region’s plan did not.

Furthermore, review of annual work plans of the Regional Offices of Environmental Coordination confirmed that the Regional Offices are simultaneously undertaking projects to develop their own regional environmental management plans and procedures to manage the various environmental aspects that have been identified by the National Office of Environmental Coordination.  A review and comparison of the regional environmental management plans that currently exist, found that their scope and the level of detail varied from relatively simple procedures to very lengthy documents.

Interviews established that the requirements (i.e. minimum or mandatory) for the regional and / or custodial Systems have not been identified and/or communicated.  The National Office of Environmental Coordination anticipates that in developing their systems, the regions and custodians will conform to the requirements identified in the International Organization for Standardization’s Environmental Management System.

Review of the National Environmental Management System implementation plan found that the Plan does not outline how the various regional and custodial systems will co-exist or integrate with the National System.

Finally, the implementation plan for the System included an Environmental Management System working group that is expected to act as a forum to ensure consistency.  A review of the working group’s terms of reference further found that the group’s composition was internal to the environmental advisors from the Office of Environmental Coordination (national and regional) without custodial representation. The working group started meeting in 2013, and has held two meetings as of the time of the conduct of the audit. 

The aforementioned observations underscore the need for a strong project management approach that ensures that Department’s requirements for an Environmental Management System are accurately assessed, defined based on need, and leverage existing practices and procedures to enhance the implementation of the System in a coordinated manner that ensures consistency and integration within all regions, departmental sectors and the Canadian Coast Guard.

Recommendations / Managment Action Plan
Recommendation Management Action Plan
  • R-4.  In an effort to achieve consistency and efficiency in the realization of the National Environmental Management System, consultations need to be conducted on a regular basis during implementation, involving all custodians and the Offices of Environmental Coordination (national and regional). Consultations would clarify and confirm expectations that while multiple environmental management systems may co-exist within the National System, the National EMS sets the minimum standard for environmental management for the Department. 
  • The Assistant Deputy Minister, Human Resources and Corporate Services, will continue to rely on the National Environmental Management Committee as the consultation mechanism for new and ongoing environmental management initiatives, as a means to help ensure the successful co-existence of management systems, and to ensure all systems meet the minimum national standard established by the National Environmental Management System for Operations and Assets.  Senior management committee concurrence will also be sought, as needed, through the Directors General Management Committee and the Deputy’s Management Committee semi-annual meetings.
Office of Primary Interest:

The Assistant Deputy Minister, Human Resources and Corporate Services 

Due Date:

By March 2015

7.0 AUDIT OPINION

Based on the audit findings, the conclusion is that, overall, the National Environmental Management Framework including the National Environmental Management System currently being implemented, include the appropriate governance, accountability and organizational structures to ensure effective and efficient environmental management of departmental operations and assets.  However, opportunities were identified where improvements should be made and actions taken to: enhance governance and oversight by senior management committees; further strengthen the accountability framework for environmental management; address gaps identified in key supporting elements and process of the framework; and, minimize any risk to the efficient, effective and timely development and implementation of the National Environmental Management System currently in progress.

Given the collective responsibility for environmental management within the Department, it is recognized that the implementation of the following recommendations will require the engagement of senior management committees, as well as individual sectorial and custodial senior managers who have been assigned responsibilities within the Department’s accountability framework for environmental management. The recommended improvements and actions are as follows:

  • Enhance the functioning of the committee structure for oversight of environmental management.  Actions that would strengthen the committee structure and enhance oversight include the following:

For departmental Senior Management Committees:

  • Identification of the process and information requirements needed to support environmental management as a standing agenda item on the Department’s senior management committees (Deputy’s Management Committee and Directors General Management Committee).  The frequency in which this item would appear would consider the level of risk and need for oversight to ensure that the Department fulfills its collective responsibilities for achieving, in an effective and efficient manner, the objectives and targets defined within its National Environmental Management System.

For National Environmental Management Committee:

  • Formalizing the Committee's obligations for regular reporting to the Department’s senior management committees;
  • Integrating more senior level management participation and establishing minimum quorum requirements; and,
  • Tracking and distribution of action items and their completion and clearly linking these to updated forward agendas of the committee.
  • Strengthen the overall environmental management accountability framework in the Department by ensuring that:
    • The mandate of the Office of Environmental Coordination and the respective regional offices is clearly and consistently communicated across the department.
    • Roles, responsibilities and authorities of senior management committees with respect to environmental management are clearly identified, documented, and communicated to all participants.
    • Sector heads and senior custodial managers are advised that the roles and responsibilities specific to environmental management should be defined and communicated to operational level managers and staff that undertake significant environmental management activities within their respective organizations.
  • Ensure that the following key elements and supporting processes of the National Environmental Management System are fully developed and implemented in a timely manner:
    • Objectives and targets for all significant environmental aspects and/or key management activities are defined in a sufficient level of detail at the departmental, sectorial and custodial level to allow for meaningful performance measurement.  Therefore, further enabling the Department to assess, monitor, and report on the results that are being achieved through its environmental management activities.
    • A comprehensive training strategy and program that systemically identifies the training needs and effectively coordinates training activities across the Department.
  • In an effort to achieve consistency and efficiency in the realization of the National Environmental Management System, consultations need to be conducted on a regular basis during implementation, involving all custodians and the Offices of Environmental Coordination (national and regional). Consultations would clarify and confirm expectations that while multiple environmental management systems may co-exist within the National System, the National EMS sets the minimum standard for environmental management for the Department.

8.0 STATEMENT OF CONFORMANCE

In my professional judgment as Chief Audit Executive, sufficient and appropriate audit procedures have been conducted and evidence gathered to support the accuracy of the opinion provided and contained in this report.  The extent of the examination was planned to provide a reasonable level of assurance with respect to the audit criteria.  The opinion is based on a comparison of the conditions, as they existed at the time, against pre-established audit criteria that were agreed on with Management.  The opinion is applicable only to the entity examined and within the scope described herein.  The evidence was gathered in compliance with the Treasury Board Policy and Directive on Internal Audit.  The audit conforms to the Internal Auditing Standards for the Government of Canada, as supported by the results of the Quality Assurance and Improvement Program (QAIP). The procedures used meet the professional standards of the Institute of Internal Auditors.  The evidence gathered was sufficient to provide Senior Management with proof of the opinion derived from the internal audit.

APPENDIX A – AUDIT CRITERIA

Based on a combination of the evidence gathered through documentation examination, analysis and interviews, each of the audit criteria listed below was assessed and a conclusion for the audit criteria was determined using the following definitions:

Conclusion per Audit
  Conclusion on Audit Criteria Definition of Opinion
1 Criteria Met – Well Controlled Well managed or no material weaknesses noted, controls are effective.
2 Criteria Met with Exceptions – Controlled Requires minor improvements.
3 Criteria Met with Exceptions – Moderate Issues Requires improvements in the areas of material financial adjustments, some risk exposure.
4 Criteria Not Met – High Impact – Significant Improvements Requires significant improvements in the area of material financial adjustments, serious risk exposure.

The following are the audit criteria and examples of key evidence and/or observations noted which were analyzed and against which conclusions were drawn.  In cases where significant improvements and/or moderate issues were observed, these were reported in the audit report.

Audit Criteria / Conclusions
Audit Criteria Conclusion on Audit Criteria Examples of Key Evidence/ Observations

Line of Enquiry 1 – Governance, Roles and Responsibilities and Accountability

Criterion 1.1:  Senior management committees, which constitute the governance structure for departmental environmental management, have a clear mandate and collectively possess sufficient knowledge, experience and time to exercise a meaningful oversight function

2 6.1.1

Criterion 1.2: Senior management committees, and those accountable for environmental management, are requesting and receiving sufficient, complete, timely and accurate information to support the fulfillment of their roles, responsibilities and accountabilities

2 6.1.1
Criterion 1.3: A clear and effective organizational structure is established to support effective environmental management by having clearly delineated roles, responsibilities and accountabilities for environmental management 2 6.2.1

Criterion 1.4: Senior management has designated and assigned an appropriate management representative with respect to the departmental environmental management and given them sufficient power and authority to make decisions, take action and direct and/or coordinate the actions of others

1 6.2.1

Criterion 1.5: Assigned personnel have a clear understanding and have accepted their environmental management roles, responsibilities and accountabilities

2 6.2.1
Line of Enquiry 2 – Policy and Programs
Criterion 2.1:  The Department has a systematic process to establish, implement and maintain environmental objectives and targets that address its most significant environmental risks and/or issues; associated environmental management programs; and appropriate performance measures and monitoring 2 6.3.1
Criterion 2.2:  Core elements of the National Environmental Management System including documents, procedures and other detailed materials used to ensure effective planning, operation and control of processes relating to the department’s environmental aspects are being developed at the appropriate levels within the National Environmental Management Framework and implemented in a timely manner 2 6.3.1
Criterion 2.3:  Senior management is made aware of, and understands, the necessary resource requirements to ensure that the National Environmental Management Framework is properly established, implemented, maintained and approved; and provides these resources 2 6.4.1