Internal Audit Report
Audit of Motor Vehicle Fleet
Date: June 17, 2015
TABLE OF CONTENTS1.0 EXECUTIVE SUMMARY
3.0 AUDIT OBJECTIVE
4.0 AUDIT SCOPE
5.0 AUDIT APPROACH
6.0 AUDIT FINDINGS
- 6.1 Governance
- 6.2 Risk Management
- 6.3 Deliverables
- 6.4 Savings
- 6.5 Life-Cycle Management Principles
- 6.6 Information
8.0 STATEMENT OF CONFORMANCE
APPENDIX A — AUDIT CRITERIA
Fisheries and Oceans Canada’s motor vehicle fleet, including Canadian Coast Guard vehicles, is the third largest in the federal government with about 1,400 light duty vehicles and an additional 100 medium and heavy duty vehicles. Fisheries and Oceans Canada spends about $7 million on operations and maintenance and $5 million for replacement of vehicles per year.
In 2011-12, Fisheries and Oceans Canada began an initiative called the Motor Vehicle Fleet Rationalization Project. The Project was carried out in two phases. Phase I was to provide the department with information to assist in reporting on the Federal Sustainable Development Strategy target for reducing greenhouse gases in the vehicle fleet and in reporting on asset management requirements for the 2010-11 Management Accountability Framework Results – Fisheries and Oceans Report. Phase 2 was designed to determine if significant savings could be achieved through a comprehensive assessment of Fisheries and Oceans Canada program requirements in order to attain the “right” vehicle fleet size matched to operational requirements. It was believed that operating and replacement costs could be reduced by 10 percent annually. These ongoing savings were therefore determined to be $1.2 million annually.
This assurance engagement was approved as part of the Multi-year Risk-based Audit Plan 2014-15 to 2016-17. The overall objective of the audit was to provide assurance that the implementation of the approach for the Motor Vehicle Fleet Rationalization Project was on track to achieve the desired state of the “right” vehicle fleet size and national vehicle fleet configuration that meets departmental current and future operational expectations.
Based on the audit work conducted, it was found that the approach for the Project was on track to achieve the desired state of the “right” vehicle fleet size, and national vehicle fleet configuration. The project was successful in reducing the size of the Department’s motor vehicle fleet and achieved its targeted savings of $1.2 million annually that had been identified as part of the Department’s Strategic and Operating Review.
However, a total potential savings of $14.3 million that had been identified by the Motor Vehicle Fleet Rationalization Project did not take into consideration the impact in terms of additional costs that may be incurred because of vehicles not being replaced. Therefore, the actual amount of savings from the Project has not been determined.
Opportunities were identified where improvements should be made and actions taken to enhance governance; ensure consistency in the implementation of tools and processes emanating from the Project; improve communications and consultation with stakeholders; and strengthen some aspects of life-cycle management such as developing a funding strategy for life-cycle management and clarifying approaches for establishing and maintaining motor vehicle pools.
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.
Fisheries and Oceans Canada’s motor vehicle fleet, including Canadian Coast Guard vehicles, is the third largest in the federal government with about 1,400 light duty vehicles and an additional 100 medium and heavy duty vehicles. Annually, Fisheries and Oceans Canada spends about $7 million on operations and maintenance and $5 million for replacement of vehicles.
In 2011-12, Fisheries and Oceans Canada began an initiative called the Motor Vehicle Fleet Rationalization Project (herein the Project). The Project was carried out in two phases:
Phase I was to provide the department with information to assist in:
- a) reporting on the Federal Sustainable Development Strategy target for reducing greenhouse gases in the vehicle fleet; and,
- b) reporting on asset management requirements for the 2010-11 Management Accountability Framework Results – Fisheries and Oceans Report.
Phase 2 was designed to determine if significant savings could be achieved through a comprehensive assessment of Fisheries and Oceans Canada program requirements in order to attain the “right” vehicle fleet size matched to operational requirements, and to ensure that the vehicle selected for an individual task be the one best suited by virtue of capability and configuration. The Project also presented an opportunity for Fisheries and Oceans Canada to decrease their greenhouse gas footprint and progress towards a sustainable greener vehicle fleet in the future.
It was believed that by adopting consistent, rigorous motor vehicle fleet management practices across the department, operating and replacement costs could be reduced by 10 percent. .
The Project also became part of the Strategic and Operating Review initiative. The Strategic and Operating Review was an initiative that was started as a result of the 2012 Federal Budget. The expected savings for motor vehicles that were attributed to the Strategic and Operating Review initiative were determined to be $1.2 million annually.
This audit was included in the Multi-year Risk-based Audit Plan 2014-15 to 2016-17.
Based on work conducted during the engagement planning phase, the audit team determined that the overall audit objective was to provide assurance that the implementation of the approach for the Motor Vehicle Fleet Rationalization Project was on track to achieve the desired state of the “right” vehicle fleet size, and national vehicle fleet configuration that meets Fisheries and Oceans Canada’s current and future operational expectations. The audit also provided an opportunity to identify areas for improvement and lessons learned from the implementation of the Project.
The audit scope included an examination of the conduct and implementation of the Motor Vehicle Fleet Rationalization Project. More specifically the audit covered the following areas as they related to the implementation of the Project:
- Risk Management; and
The scope of the audit included all Fisheries and Oceans Canada’s sectors and the Canadian Coast Guard.
Fieldwork took place in Fisheries and Oceans Canada’s Newfoundland and Labrador, Maritimes, Quebec, and Pacific regions, as well as in the Canadian Coast Guard’s Atlantic, Central and Arctic, and Western regions. Telephone interviews were conducted and documentation was obtained from those regions not visited during the conduct of the audit.
The audit team carried out its mandate in accordance with Treasury Board’s Policy on Internal Audit and the Internal Auditing 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.
This section provides the observations and recommendations resulting from the audit work carried out. 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:
- Risk Management;
- Deliverables of the project;
- Life-Cycle Management Principles; and
For conclusions by audit criterion, please refer to Appendix A.
Based on 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 that may have an impact on the achievement of departmental objectives, and is indicative of the priority that management should give to the recommendations associated with that observation. The following criteria were used in determining the risk exposure level:
|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.|
The governance of a project is a combination of processes and structures implemented to inform, direct, manage and monitor a project towards the achievement of its objectives. A proper governance structure is key for a project as it identifies the oversight bodies (committees, working groups), the distribution of roles and responsibilities among different stakeholders in the project and also includes the procedures for making decisions. In addition, it allows for the monitoring of the actions and proper performance management and accountability.
|Moderate||6.1.1 Initially, overall governance for the project was informal and unstructured, with the exception of the Strategic and Operating Review component of the Project. However, governance mechanisms currently in place for the implementation of the project deliverables are generally appropriate with the exception of the reorganization of the Canadian Coast Guard regions, which has created challenges in terms of roles and responsibilities for vehicle fleet management.|
Governance of the Project:
As mentioned in the Background section (2.0) of this report, the Project was carried out in two phases. The governance for both Phases 1 and 2 of the Project was informal and unstructured. The Project was led by consultants with the collaboration of Fisheries and Oceans Canada’s Materiel and Procurement Services staff.
When the Project was included as part of the Strategic and Operating Review initiative in 2012, the governance became more structured. Existing practices that were already in place for the Strategic and Operating Review were used to provide the necessary oversight and guidance for the Project. For example, documentation examined showed that the Assistant Deputy Minister, Transformation, compiled all Strategic and Operating Review initiative information and reported regularly on progress to the Departmental Management Board (now the Deputy’s Management Committee) and to the Departmental Audit Committee.
The Regional Management Committees monitored the implementation of the Project in their region. In some instances, committees or working groups were used in the regions to facilitate the implementation of the tools and processes emanating from the Project. As for the Canadian Coast Guard involvement, the Project was not discussed extensively at National or Regional Management Boards except in one region where specific presentations on this topic were made by the Regional Director, Finance and Administration.
There are lessons that can be learned for some elements of the overall governance of the Project. The audit found that there was no formal project documentation such as a project plan or charter that clearly identified project objectives, timelines, milestones and roles and responsibilities. While the Chief Financial Officer had overall accountability for the Project, the Regional Director, Finance and Administration, was the lead in each region. While information sessions for the Project were provided to regional staff by the consultants and Headquarters’ Materiel and Procurement Services Branch, interviews revealed that regional stakeholders were still unclear about the project objectives, deliverables and timelines. The development of a project plan and/or project charter could have addressed the uncertainty about what the Project was trying to achieve and contributed to a more collaborative approach to its implementation.
The audit also found that the Project had two main objectives right-sizing of the fleet and providing information to the Department on greenhouse gas reduction targets. One objective was dependent on the other. Right-sizing the fleet contributed to reducing greenhouse gases due to fewer vehicles on the road and standardizing the vehicle fleet through the national vehicle selector. A greenhouse gas reduction implementation plan for buildings and the vehicle fleet, led by Fisheries and Oceans Canada's Office of Environmental Coordination, was recently developed with input from the Chief Financial Officer Sector.
Monitoring was carried out on the number of vehicles targeted for disposal but not on the overall financial savings that were expected to be achieved by the Project. Relevance and quality of data for performance monitoring on fleet was an issue at the beginning of the project. In addition, there was also no overall assessment of the performance of the project.
Governance put in place to implement the Project’s deliverables:
Governance for this Project was examined at two levels. The first was the governance for the overall conduct of the Project. The second was the governance for the implementation of tools and processes that were developed during the Project. The audit found that overall, appropriate governance was in place to implement the tools and processes that emanated from the Project.
When the Project moved to the implementation stage, the number of vehicles to be disposed of was identified for each region. Monthly status reports were prepared and sent by regions to Headquarters for monitoring the disposal of vehicles identified as no longer required for program needs. In implementing the Project, there were some challenges in the area of governance:
The lack of clear roles, responsibilities and accountabilities for the Project as well as the absence of well-defined objectives impacted its delivery and created some confusion and hampered buy-in for the Project. In addition, the absence of an overall assessment of the Project made it difficult to know if project objectives were achieved.
|Recommendation||Management Action Plan|
|R-#1. The Chief Financial Officer should ensure that roles and responsibilities, with respect to the acquisition planning process, for all sectors and the Canadian Coast Guard are aligned with the Departmental process as outlined in the Directive on Motor Vehicle Fleet Management.||
|Office of Primary Interest:||Chief Financial Officer Sector|
|Due Date:|| a) October 2015
b) December 2015
The Treasury Board’s Framework for the Management of Risk in the federal government states that effective risk management in the federal government should:
- support government-wide decision-making and priorities as well as the achievement of organizational objectives and outcomes, while maintaining public confidence;
- be tailored and responsive to the organization's external and internal context including its mandate, priorities, organizational risk culture, risk management capacity, and partner and stakeholder interests; and
- add value as a key component of decision-making, business planning, resource allocation and operational management.
|Moderate||6.2.1 No formal risk assessment was conducted for the Project.|
The audit team was unable to find evidence that the risks faced by the Department in implementing the Motor Vehicle Fleet Rationalization Project or the tools and processes emanating from it were formally assessed and documented prior to decisions being made.
The audit did identify a number of areas where risks pertaining to motor vehicles were considered after the Project was completed. The Canadian Coast Guard’s Integrated Investment Plan 2014/15 to 2018/19 identifies three risks that could also affect the Department's motor vehicle fleet: insufficient investment into the asset base will cause serious problems for the Department in meeting its objectives; priorities could change due to a shift in government policy; and assets may unexpectedly be unable to support program requirements.
As part of the Project, a number of tools were developed to facilitate right-sizing the Department’s motor vehicle fleet. These tools included a Fleet Transition Plan; a National Vehicle Selector; a Centralized Acquisition Planning Approval Process; Vehicle Business Case template; and the Fisheries and Oceans Canada’s Directive on Motor Vehicle Fleet Management. Interviews with key stakeholders from the regions indicated that there was limited consultation on the development of tools and the risks associated with implementing them.
Overall, there is a wide-spread recognition by Chief Financial Officer Sector staff and vehicle custodians of the importance and the value associated with right-sizing the Department’s motor vehicle fleet that occurred under the Project. However, there were concerns expressed by program managers that decisions were made by senior management that affected delivery of departmental programs without a full understanding of the risks involved. Some of the key risks identified during interviews included: the lack of financial resources to properly life-cycle manage vehicles; changes in type and capacity of vehicles that can be purchased; and the impact on program delivery.
Decisions were made without a formal, documented risk management strategy assessing the impact of conducting the Project. The absence of a risk assessment as well as corresponding mitigating strategies could impact the delivery of departmental programs and expose the Department to increased health, safety and legal risks.The lack of consideration given to assessing risks associated with the Project should be considered a lesson learned for future projects.
The expected project results were intended to assist the Department in achieving significant savings through a comprehensive measured assessment of its transportation requirements relative to attaining the “right” vehicle fleet size, and national vehicle fleet configuration that meets the departmental current and future operational expectations. The Project produced tools and processes such as, the National Vehicle Selector; Fleet Transition Plan; and Vehicle Business Case template which would assist the Department in meeting its objectives of rightsizing the vehicle fleet with the appropriate configuration.
|Moderate||6.3.1 Although the tools and processes developed during the Project are being implemented, the audit found, through interviews and document review, that they are not applied consistently across all regions and are not well understood or meeting all stakeholders’ needs for managing the Department’s motor vehicle fleet.|
The Chief Financial Officer Sector is responsible for ensuring that risk-based management practices and controls are established so that the department's motor vehicle fleet assets are managed in a sustainable and financially responsible manner and that processes are in place to ensure the effectiveness of those controls.2
The Materiel and Procurement Services Branch within the Chief Financial Officer Sector has implemented tools and processes that were developed through the Project and are contributing to the management of the Department’s motor vehicle fleet. These include, among others:
Although the tools and processes developed through the Project are being followed and utilized by Chief Financial Officer Sector staff and vehicle custodians, they are not being applied consistently nationally, are not understood or meeting all stakeholders’ needs. Limited involvement on the part of regional vehicle stakeholders (regional Chief Financial Officer staff and vehicle custodians), the absence of service standards and limited communication with key stakeholders have led to the identification of areas for improvement for the following Project tools and processes.
Directive on Motor Vehicle Fleet Management:
Fisheries and Oceans Canada’s Directive on Motor Vehicle Fleet Management came into effect April 1, 2014. The objective of the Directive is for the Department’s motor vehicle fleet assets to be managed in a sustainable and financially responsible manner that supports the cost-effective and efficient delivery of departmental programs. The Chief Financial Officer Sector has also developed Guidelines to accompany the Directive, but they are still in draft and have yet to be approved or formally issued.
The Directive has contributed to improving the management of the Department's motor vehicle fleet by defining roles and responsibilities for all stakeholders. Nevertheless, there are a number of areas for improvement:
Centralized Acquisition Planning Process:
The Chief Financial Officer Sector has adopted a more centralized acquisition planning process for the vehicle fleet. The goal of doing this is to help standardize the departmental motor vehicle fleet acquisition process as well as ensure compliance with policies, directives and standards. However, through interviews with stakeholders from all regions, it was noted that timelines to carry out the centralized acquisition planning process need to be established in order to meet the cut-off (early Fall) for Public Works and Government Services Canada’s Standing Offer and also to ensure that the desired vehicles are acquired at the lowest prices available.
The Department’s Directive and the draft Guidelines on Motor Vehicle Fleet Management set out the process for preparing the Regional and Departmental Vehicle Acquisition Plans, but this was not followed for the 2014 plans. The Guidelines (which have not been issued) also provide some general timelines, (e.g., during the summer; early fall); however, given that the entire vehicle acquisition process is time sensitive, more definitive timelines for each step in the process are needed. With the requirement for multiple approvals at the regional and Headquarters level, as well as discussions back and forth, the potential for delays exists. With delays, there is a risk that identified vehicles for acquisition may not be delivered before the fiscal year-end, and there is a potential for lapsing of funds within the sectors/programs.
The Treasury Board Guideline on Service Standards states that "Service standards are an important element of service management excellence”; they help clarify expectations for clients and employees, enable performance management, support client satisfaction and provide general guidance on the use of service standards. Establishing service standards (timelines) for the acquisition process (for regions and the Chief Financial Officer Sector) would provide targets on the preparation of the plan and also inform clients (sectors/programs) when they may be able to obtain new vehicles.
The Canadian Coast Guard is currently in the process of developing an investment plan for the acquisition of assets with minor capital funding. A portion of those funds is expected to go towards the acquisition of new vehicles. Through interviews with stakeholders within the Canadian Coast Guard, they indicated that they intend to follow the same process currently being conducted by the Chief Financial Officer Sector and will leverage the expertise and oversight of the Regional Vehicle Fleet Managers and leadership of the Chief Financial Officer Sector in the acquisition process.
National Vehicle Selector:
With the creation of a National Vehicle Selector, the Chief Financial Officer Sector has standardized the utilization of vehicle types and reduced the purchase of vehicles based on personal preference instead of capabilities. The National Vehicle Selector is updated annually by the Chief Financial Officer Sector at Headquarters to ensure vehicles are still available in the Public Works and Government Services Canada’s Government Motor Vehicle Ordering Guide. On several occasions, it was expressed by regional stakeholders that the vehicle choices included in the Department’s National Vehicle Selector do not always meet program operational needs. It was noted by Materiel and Procurement Services staff that a Business Case can be prepared for non-standard vehicles. However, stakeholders were of the view that increased consultation and communication may have ensured that the National Vehicle Selector could have better met program needs.
Vehicle Business Case Template:
Business Cases are required for all vehicles that are not included within the National Vehicle Selector or had not been included in the Regional Acquisition Plan. There is an extensive approval process with numerous sign-offs required at the regional and Headquarter levels. As discussed previously under the centralized acquisition process, there is a potential for delays in getting the cases approved resulting in missed opportunities for purchasing required vehicles or the lapsing of sector/program funding. As with the acquisition planning process, service standards (timelines) would improve this process as they would set expectations for both the clients and the Chief Financial Officer Sector.
Fleet Transition Plan:
To assist with the right–sizing exercise, a Fleet Transition Plan was developed for each Fisheries and Oceans Canada/Canadian Coast Guard Region. Based on documentation reviewed, the audit found that the Department has succeeded in achieving the right size fleet by redlining units no longer required to deliver programs as part of the Strategic and Operating Review, based on low utilization of vehicles or re-allocation between programs.
While tools and processes are being used, they do not always fully meet the stakeholders’ vehicle operational needs. Despite efforts made by Materiel and Procurement Services staff at Headquarters, regional vehicle stakeholders did not believe they were adequately consulted on the development and implementation of tools and processes.
|Recommendation||Management Action Plan|
|R-#2. It is recommended that the Chief Financial Officer:|
|Office of Primary Interest:||Chief Financial Officer Sector|
|Due Date:|| 2.1 October 2015
2.2 December 2015
2.3 August 2015
2.4 January 2016
2.5 Ongoing October 2015
Treasury Board's Policy on the Management of Projects states that the management of projects is key to providing value for money and demonstrating sound stewardship in program delivery. A comprehensive approach to managing projects, which is integrated across the department and is appropriate for the level of project risk and complexity, will enhance the likelihood of realizing project outcomes. This approach should ensure that accountability for outcomes is clear, appropriate controls are in place to minimize risk and limit project duplication and overlap, key project stakeholders are consulted, and outputs and outcomes are monitored and reported.
|Moderate||6.4.1 Savings expected to be achieved under the Strategic and Operating Review initiative were deducted from departmental budget allocations; however, there was no overall analysis of financial savings attributed to the Motor Vehicle Fleet Rationalization Project.|
In 2011, Fisheries and Oceans Canada undertook (with an external consultant) the Project to determine if significant savings could be achieved through a comprehensive assessment of departmental program requirements in order to attain the “right” vehicle fleet size matched to operational requirements, and to ensure that the vehicle selected for an individual task is the one best suited by virtue of capability and configuration.
|Recommendation||Management Action Plan|
|R-#3. It is recommended that prior to concluding on cost savings resulting from Phase 2 of the Motor Vehicle Fleet rationalization Project, the Chief Financial Officer should consider other related factors such as increased costs incurred (e.g., vehicle repairs and maintenance; car rentals and leases; and use of personal vehicles).||
|Office of Primary Interest:||Chief Financial Officer Sector|
The Treasury Board Guide on the Management of Materiel states that the extended life of materiel assets has important implications for decision makers. For instance, an acquisition decision that is based on the lowest purchase price but that ignores potential operating and maintenance costs may result in a higher overall cost. Therefore, it is important to understand all phases in the materiel management life-cycle. Managing effectively requires that an appropriate level of management interest and control be maintained through all phases in the materiel asset's life-cycle. Materiel management strategies should always take into consideration the full life-cycle costs and benefits of alternatives to meeting program requirements.
6.5.1 Life-cycle management principles are applied in regards to the management of the Department's motor vehicle fleet. However, funding mechanisms associated with life-cycle costs of motor vehicle vary from region to region as well as between the Canadian Coast Guard and Fisheries and Oceans Canada which leads to inconsistencies on how vehicles are life-cycle managed throughout the department.
In addition, there is no national guidance on if or when motor vehicle pools are to be established, where they are established, or how they are to be managed.
Finally, the audit identified a number of best practices, particularly in the areas of vehicle replacement criteria, vehicle audits and log books that could assist in the management of departmental fleet.
Funding mechanisms associated with life-cycle costs of motor vehicles vary throughout the department. Fisheries and Oceans Canada regions have their own process for allocating funds for vehicle acquisitions, either at the regional level or within programs where the Regional Director General has distributed funding to them. Canadian Coast Guard funding is administered centrally at Headquarters. In addition, proceeds obtained from the sale of vehicles are treated differently among the Fisheries and Oceans Canada regions and the Canadian Coast Guard. Some use the proceeds to reinvest into the vehicle fleet while others use them to address other priorities.
In the Motor Vehicle Fleet Rationalization Project Phase 2 report, it was recommended that acquisition funds be centralized at Headquarters but this recommendation was not implemented by Fisheries and Oceans Canada. The Canadian Coast Guard still intends to have centralized funding at Headquarters for vehicle acquisitions. If there is to be no central fund within Fisheries and Oceans Canada for vehicle acquisitions, there is a need for a funding strategy or framework to be established for the regions that could identify potential sources of funds for vehicle acquisition.
Fisheries and Oceans Canada’s Central and Arctic Region has a framework in place for funding acquisitions. The framework includes the following source of funds:
This framework has been in place for a number of years and provides a structured approach for funding vehicle acquisitions. While this model may not be acceptable to all regions, it certainly is one option, or a variation of it, that could be adopted by other regions.
In addition to centralized funding and the Central and Arctic Regions model, another option could be having sectors provide full funding for vehicles in proportion to their usage. This is already being done to some extent whereby Conservation and Protection and Ecosystems and Oceans Science Sector had provided funding in the past to regions to assist in vehicle acquisition.
Vehicle Replacement Criteria:
The Canadian Coast Guard, in developing a new vehicle replacement process, has used a process to assess its motor vehicle fleet based not only on vehicle age and kilometers but also includes vehicle impact on programs, vehicle reliability and reported body condition. Fisheries and Oceans Canada’s sectors also have processes that take into consideration factors similar to those used by the Canadian Coast Guard but they are inconsistent and done on an informal basis. The Canadian Coast Guard approach could be formalized by the Chief Financial Officer Sector for use by all regions when preparing the Departmental Vehicle Acquisition Plan as it may provide a more in-depth assessment of the vehicle replacement needs.
Vehicle Audits and Log Books:
A process that could be shared with other regions is the practice of vehicle audits that are conducted by the Regional Vehicle Fleet Manager in the Quebec Region. The region has put in place a five-year rotational plan where 20 percent of the vehicles are audited each year with the exception of vehicles in remote places (where ad hoc audits are conducted). The vehicle audit checklist examines physical elements, such as log books, safety and security equipment and ARI maintenance receipts consolidation. It also serves as a reminder to the operators of the guiding principles and of the requirement for vehicle maintenance, the proper use of departmental vehicles and personal use of vehicles, etc.
The Quebec Region also keeps a laminated set of procedures in every log book associated with a vehicle. The log book procedure demonstrates how to use the log book template, contains emergency contact numbers, rules on maintaining the vehicle (respect and cleanliness), etc.
Pooling of Vehicles:
The audit found that there was no clear direction on when motor vehicle pools should be established and how they should be managed. The acceptance of motor vehicle pools varies from region to region and the management of these pools also varies from location to location. Pooling of vehicles exists at several Fisheries and Oceans Canada and Canadian Coast Guard locations, some being more formal than others.
In the Quebec Region, there are pools located in Quebec City and Mont-Joli. In Quebec City, where a comprehensive in-house pool management system has been developed, the vehicles in the pool are available for all sectors to use. In other regions, vehicle pools tend to be operated along the lines of “ownership” of vehicles. Vehicles are often perceived to be “owned” by those managers to whom they were allocated or from which budget they were paid. This creates a potential conflict when sectors, other than the “owner” desire to use a vehicle from a pool. While the vehicles in the pool are available for all sectors, the “owner” can bump a reservation from another sector if they need a vehicle. Another situation identified during the audit was where the “owner” stated that they would not loan their vehicles to other sectors which hampers the effective and optimal utilization of vehicles.
There are certain benefits to be gained by having vehicles included in a pool, such as being able to optimize the use of vehicles that may not otherwise be fully utilized. In some cases where there is a vehicle pool, there is an opportunity to recover some portion of costs from those who use the vehicles and attach some degree of accountability to those users. While there are benefits to having motor vehicle pools, there are costs associated with maintaining motor vehicles and those costs, at most locations that have pools, have not been determined.
The Directive on Motor Vehicle Fleet Management is silent on motor vehicle pools while the Draft Guidelines state that “In order to optimize motor vehicle utilization, motor vehicles must be pooled and shared in those locations where many vehicles are used when it is operationally feasible and cost-effective to do so”. Some of the areas that require further clarification include:
The lack of clarity and guidance with respect to vehicle pools can lead to inconsistent and inefficient practices over the management of vehicles.
The absence of a funding strategy could result in the Department not having sufficient funds to carry out adequate life-cycle management of vehicles. The absence of formal vehicle replacement criteria may result in the Department retaining unsafe vehicles in its motor vehicle fleet putting vehicle operators at risk.The limited use of vehicle pools can impact the department’s ability to maximize the utilization of vehicles to their fullest. In addition, failure to pool and share vehicles may lead to increased use of car rentals and personal vehicles; however, this was not assessed within the scope of the audit.
|Recommendation||Management Action Plan|
|Office of Primary Interest:||Chief Financial Officer Sector|
|Due Date:||4.1 December 2015
4.2 December 2015
4.3 October 2015
There is a need for up-to-date and accurate information on which to make decisions. Such information needs to be gathered so that a well-informed decision can be made.
|Low||6.6.1 Controls are in place to ensure the information is reliable and complete to support informed decision-making on the Project.|
To effectively manage the Fisheries and Oceans Canada’s motor vehicle fleet, complete and accurate information must be available. Data integrity issues were highlighted during the conduct of the Motor Vehicle Fleet Rationalization Project, particularly in the areas of vehicle utilization and fuel consumption.
The Project helped to improve the accuracy of the vehicle fleet information. For example, the ABACUS (Departmental Financial System) and ARI (the Fleet Service Provider) databases are better maintained and are reconciled on a periodic basis. The information is more current than in the past and allows for analysis of vehicle data. Furthermore, the regions have also improved the manner in which they maintain and use vehicle log books as well as inputting the data into ARIs in a timely fashion.The ARI system and its reports are regularly used by regional and Headquarters Materiel and Procurement Services staff, as required. Some regions identified the need for more training on the system globally and more specifically on its reporting functionalities.
Based on the audit findings, our opinion is that the overall governance for the Project was informal and unstructured, but that the governance mechanisms currently in place are generally appropriate. No formal risk management assessment was conducted for the Project and this is a lesson learned for the management of future Fisheries and Oceans Canada projects. The audit also found that the deliverables developed through the Project were implemented but that there is an opportunity for improvement in the area of communication, service standards and life-cycle management, especially for funding. The recommended improvements are as follows:
- Ensure that the Canadian Coast Guard roles and responsibilities for motor vehicle fleet management are integrated as part of the provisions of the Directive on Motor Vehicle Fleet Management.
- Establish formal timelines for the preparation and approval of the Regional and Department Vehicle Acquisition Plans and Business Cases and revise the Directive and Guidelines to ensure that requirements are clear, consistent, and communicated to all motor vehicle stakeholders.
- Consider other related factors such as increased costs incurred to conclude on cost savings.
- Establish a funding strategy or framework that would identify sources of funds for the acquisition of new vehicles and clarify the rules around pooling.
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 with the Internal Auditing Standards for the Government of Canada, as supported by the results of the Quality Assurance and Improvement Program. 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.
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 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||Conclusion on Audit Criteria||Examples of Key Evidence/ Observations|
|Line of Enquiry 1 - Governance - To provide assurance that an effective governance structure was formally established to implement the Motor Vehicle Fleet Rationalization Project.|
|Criterion 1.1: Effective oversight practices were established for the Project, including reporting on its implementation.||3||6.1|
|Criterion 1.2: Roles, responsibilities and accountabilities were clearly defined, documented, communicated and understood and were appropriate for the implementation of the Project.||3||6.1|
|Criterion 1.3: Appropriate governance was in place for implementing the Project, including its results.||3||6.1|
|Line of Enquiry 2 - Risk Management - To provide assurance that risk management practices were embedded in the implementation of the Project.|
|Criterion 2.1: A risk assessment was conducted on the implementation of the Project.||3||6.2|
|Criterion 2.2: Consideration was given to the risk factors in implementing new tools and processes emanating from the Project.||3||6.2|
|Line of Enquiry 3 - Results - To provide assurance that the deliverables identified in the Project to achieve the desired state of the right vehicle fleet size, and national vehicle fleet configuration that meets the Department's current and future operational expectations have been completed. This would include those deliverables in the Project's phase I and II reports.|
|Criterion 3.1: The tools and processes developed as a result of the Project have been implemented and are contributing to the effective management of the motor vehicle fleet. These include among others:
|Criterion 3.2: Processes and procedures developed as a result of the Project were effectively communicated to and understood by stakeholders.||3||6.3|
|Criterion 3.3: Life-Cycle Management principles are applied to the motor vehicle fleet.||3||6.5|
|Criterion 3.4: Accurate information was available to draw conclusions and support the results of the Project.||2||6.6|
|Criterion 3.5: Savings identified by the Project have been achieved.||3||6.4|
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