INTERNAL AUDIT REPORT

Internal Audit Report

Audit of Oceans Management

Project 2015-6B275
Date: March 11, 2016


TABLE OF CONTENTS



1.0 EXECUTIVE SUMMARY

The Oceans Act provides a framework for the management of Canada’s oceans. The Act assigns a leadership role to the Minister of Fisheries and Oceans in the sustainable development of Canada’s oceans. To support the implementation of the Oceans Act, the Minister of Fisheries and Oceans led and facilitated the development of Canada’s Oceans Strategy for the management of estuarine, coastal and marine ecosystems in waters that form part of Canada or in which Canada has sovereign rights under international law. The Oceans Management Program is responsible for the implementation of the Strategy.

This assurance engagement was approved as part of the Multi-year Risk-Based Audit Plan 2015-16 to 2017-18. The objective of the audit was to provide assurance that controls related to governance, information management and performance measurement are in place to implement the program delivery requirements of the Oceans Management Program.

Based on audit work conducted, deficiencies were noted in the areas of: governance strategic direction; oversight; roles, responsibilities and accountabilities; resources (financial and human); grants and contributions; and plans for achieving the target for the protection of marine and coastal areas. Recommendations for improvement include:

  • Clarify DFO’s role in integrated oceans management (particularly with respect to Large Oceans Management Areas);
  • Update Canada’s Oceans Strategy and the accompanying Policy and Operational Framework for Integrated Management of Estuarine, Coastal and Marine Environment in Canada to provide strategic direction for the Oceans Management Program;
  • Re-establish the Interdepartmental Committees for Oceans by updating their Terms of References and enhancing collaboration among federal departments to address government priorities;
  • Prepare Terms of Reference for the Oceans Management Oversight Committee that sets out the purpose of the committee, roles and responsibilities, and processes for carrying out its duties;
  • Clearly define roles, responsibilities and accountabilities for inter-sector oceans management activities;
  • Carry out a review of the allocation of resources (financial and human) to ensure that they are directed (in terms of activity and location) to where they are needed and that the mix of skills and expertise (occupational categories) are appropriate to meet program requirements;
  • Develop a set of terms and conditions for an Oceans Management Program transfer payment program and request specific authority from Treasury Board to enter into grants and contribution arrangements; and
  • Prepare a plan for the Department that sets out the steps required to achieve the DFO portion of the Government of Canada’s target for conserving marine and coastal areas.

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.

Approvals

The Internal Audit Report “Audit of Oceans Management” was presented at the Departmental Audit Committee on March 11, 2016. The Report was recommended for approval by the Departmental Audit Committee and approved by the Deputy Minister.

2.0 BACKGROUND

On January 31, 1997, the Oceans Act was brought into force and provided a framework for current and future oceans management initiatives. Part II of the Act assigns a leadership role to the Minister of Fisheries and Oceans in the sustainable development of Canada’s oceans. The Act also calls for the Minister, in collaboration with others, to lead and facilitate the development and implementation of a national strategy for the management of estuarine, coastal and marine ecosystems in waters that form part of Canada or in which Canada has sovereign rights under international law. To this end, Canada’s Oceans Strategy was put in place in 2002.

The Oceans Management Program (previously the Integrated Oceans Management Program) is responsible for the implementation of Canada's Oceans Strategy. Funding for implementation of the Strategy was provided by the Oceans Action Plan (Phase 1) (2005-06 to 2006-07) and the Health of the Oceans (HOTO) Initiative (2007-08 to 2012-13).

In May 2014, the National Conservation Plan (NCP) was announced to support a more coordinated approach to conservation efforts across the country. DFO is leading on marine conservation activities and will receive $31.5M over 5 years and $3.9M ongoing.

The Oceans Management Program is also supporting the implementation of the World Class Tanker Safety System (WCTSS) through the identification, compilation and analysis of socio, economic, cultural and ecological data to establish local sensitivities for the four designated areas for tanker safety and their environmental conditions for risk assessments and response planning. DFO will receive approximately $3.6M over three years (2014-2017) to carry out this work.

The Oceans Management Program takes an integrated and evidence-based approach to managing oceans issues and collaborates with other federal departments, other levels of government, Aboriginal groups, and other stakeholders. The overarching goal of the Program is “to ensure healthy, safe and prosperous oceans for the benefit of current and future generations of Canadians”Footnote 1.

The Oceans Management Program has gone through a number of departmental reorganizations since it was first put in place in the 1990’s:

  • From 1998 to 2009, the Program was part of the Oceans Sector;
  • From 2009 to June 2011, the Program reported to the Oceans and Science Sector;
  • From 2011 to 2013, the Program was split between operations and policy activities, with operations being in the Ecosystems and Fisheries Management Sector and policy situated in the former Program Policy Sector; and
  • Presently, the Oceans Management Program resides solely within the Ecosystems and Fisheries Management Sector.

The Oceans Management Program is delivered primarily in the regions through a Director, Ecosystems Management, with policy and guidance provided by National Headquarters.

The primary client for this audit is the Senior Assistant Deputy Minister, Ecosystems and Fisheries Management; however, the relationship and collaboration with other parts of the Department such as, Ecosystems and Oceans Science and Strategic Policy Sectors were considered during the audit.

3.0 AUDIT OBJECTIVE

The objective of the audit was to provide assurance that controls related to governance, information management and performance measurement are in place to implement the program delivery requirements of the Oceans Management Program.

4.0 AUDIT SCOPE

Based on the results of the risk assessment carried out during the engagement planning phase, the audit team identified the following Lines of Enquiry for inclusion in the scope of the audit:

  • Governance and Strategic Direction;
  • Program Delivery;
  • Information Management/Information Technology; and
  • Performance Measurement and Reporting.

The audit covered the period from April 1, 2012 to March 31, 2015, as well as the planning process for the 2015-16 fiscal year.

The audit took place at National Headquarters and in the Maritimes, Pacific and the Newfoundland and Labrador regions. For the regions not visited by the audit team, additional interviews were conducted by telephone.

5.0 AUDIT APPROACH

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 review and analysis of documentation and information.

6.0 AUDIT FINDINGS

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:

  • 6.1 Governance and Strategic Direction:
  • 6.2 Resources
  • 6.3 Administration of Grants and Contribution
  • 6.4 Protection of Marine and Coastal Areas.

These themes are derived from the results of the audit work carried out on the Lines of Enquiry identified in Section 4.0 – Audit Scope of this report.

For conclusions by audit criterion for each Line of Enquiry, 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 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:

risk definitions
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 and Strategic Direction

The achievement of governance-related objectives is supported 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.

Observations 6.1.1
Observations
High 6.1.1 Strategic Direction
The Oceans Management Program has evolved over time and priorities have shifted from the creation and management of Large Oceans Management Areas (LOMAs) to Bioregions (from Integrated Oceans Management (IOM) to Marine Protected Areas (MPA) and MPA networks). This has led to confusion and uncertainty with respect to the Oceans Management Program.

The Oceans Act and Canada’s Oceans Strategy identify the need to conserve and protect oceans environments, ecosystems and resources through integrated management to ensure economic prosperity and environmental sustainability. DFO’s Oceans Management Program is primarily responsible for overseeing and implementing the requirements of these documents.

A key element of the Oceans Act and Canada’s Oceans Strategy is integrated management which is designed to bring together diverse oceans users such as provinces, territories and indigenous groups into a single integrated management approach for the management of Canada’s oceans.

To advance integrated oceans management, the Department led and facilitated the establishment of five LOMAs. For each LOMA, partners and stakeholders worked together to develop a strategic long-term plan for the sustainable management of resources within its boundaries. For each of the LOMAs, governance structures were established and integrated management plans were developed or are in the process of being developed.

In 2011-12, the Department decided to “wind down the LOMAs”. While no definitive interpretation of “wind-down” was provided, the intention was to implement priorities and trends identified in LOMA Integrated Management Plans. There would no longer be large scale collaboration with multiple stakeholders or partners involved in the LOMA process. There is limited documentation and communication concerning this change in direction for the LOMAs or the impact that it would have on the integrated oceans management aspects of the Oceans Management Program. It has created uncertainty for Program staff as a result of lesser priority being given to LOMAs and integrated oceans management. In addition, expectations had been created about the collaborative management of oceans.

However, the need for collaborative management of oceans was re-affirmed in November 2015 in the Prime Minister’s Mandate LetterFootnote 2 to the Minister of Fisheries, Oceans and the Canadian Coast Guard in which the Minister was directed to “Work with the provinces, territories, Indigenous Peoples, and other stakeholders to better co-manage our three oceans.”

With the change in direction for program delivery, Canada’s Oceans Strategy has become outdated as well as the Policy and Operational Framework for Integrated Management of Estuarine, Coastal and Marine Environments in Canada. It is an opportune time for these documents to be updated to clearly state the Department’s direction for oceans management activities.

Observations 6.1.2
Observations
Moderate 6.1.2 Oversight
Oversight mechanisms are in place over oceans management activities; however, there are areas for improvement both internal and external to the Department.

Oversight provides management with control over activities such as determining strategic direction, allocating appropriate resources, analyzing activities related to exposure to risk and determining suitable countermeasures.

Canada’s Oceans Strategy proposed that the federal government develop, support and promote activities to establish institutional governance mechanisms to enhance and coordinate collaborative oceans management across the federal government and with other levels of government through new and existing mechanisms such as committees, management boards and information sharing.

A governance model was established in 2005-06 to coordinate and implement all oceans activities. The model includes federal government interdepartmental, federal/provincial/territorial (FPT) and regional committees. These committees include:

  • The Deputy Minister’s Interdepartmental Committee on Oceans (DMICO) - focused on advancing Canada’s Oceans Action Plan through the coordination and integration of federal policies, programs and activities in support of the four key areas of the Oceans Action Plan;
  • The Assistant Deputy Ministers Interdepartmental Committee on Oceans (ADMICO) which is a sub-committee of the DMICO - provides a forum for collaboration and joint action on implementation of Canada’s Oceans Action Plan, including the Health of the Oceans, and more broadly, implementing the Government of Canada’s agenda as it touches Canada’s oceans; and
  • The Directors’ General Interdepartmental Committee on Oceans (DGICO) which is a sub-committee of the ADMICO - provides a forum for collaboration and joint action on implementation of Canada’s Oceans Action Plan, including the Health of the Oceans, and more broadly, implementing the Government of Canada’s agenda as it touches Canada’s oceans.

These committees were intended to create, not only a vehicle for collaboration among federal government partners, but to also provide a level of oversight over oceans activities as evidenced by their terms of reference. These committees have not succeeded in fulfilling their intended function of coordinating collaborative oceans management:

  • The DMICO met last in 2008;
  • The ADMICO last convened on June 18, 2013; and
  • The DGICO last met in September, 2013.

The audit found that the Terms of References for those committees are outdated as their mandates no longer reflect current government priorities such as the NCP and the WCTSS nor do they reflect recent government direction (in the Ministers’ Mandate Letters) for closer collaboration with partners and stakeholders:

  • “Work with the Minister of Environment and Climate Change to increase the proportion of Canada’s marine and coastal areas that are protected – to five percent by 2017, and ten percent by 2020 – supported by new investments in community consultation and science.”
  • “Work with the provinces, territories, Indigenous Peoples, and other stakeholders to better co-manage our three oceans.”

Oversight over these priorities could be enhanced by renewed interdepartmental committee mandates.

Internally, when responsibility for the Oceans Management Program shifted from the Ecosystems Management Directorate to the Oceans and Fisheries Policy Directorate, a new committee, the Oceans Management Oversight Committee (OMOC) was created.

OMOC is chaired by the Director General, Oceans and Fisheries Policy and includes the Director of Oceans Management at NHQ and the Regional Directors of Ecosystems Management. The Terms of Reference outlining the committee's governance as well as its roles and responsibilities have not been prepared. Even though the creation of this committee is supported by its members, there are a number of areas that could be improved, such as providing meeting agendas and other documentation in a timely manner. As well, the Committee could provide leadership, direction, and advice for planning and operationalizing the Oceans Management Program. The OMOC could also review and provide input to cyclical planning and reporting documents (business plans, departmental report on priorities, etc.). The TOR could outline these responsibilities for the OMOC.

Observations 6.1.3
Observations
Moderate 6.1.3 Roles; Responsibilities and Accountabilities
With the number of reorganizations at NHQ and changing priorities since the establishment of the Oceans Management Program, roles, responsibilities and accountabilities within the Department have evolved and are not clearly defined or understood.

Clear delineation of roles, responsibilities and accountabilities support the effective coordination between all parts of the organization and ensure that all parties are aware of, and comply with, their responsibilities.

The multitude of organizational changes within the Oceans Management Program, as well as changing and unclear priorities, has contributed to the lack of clarity of roles, responsibilities and accountabilities.

Roles, responsibilities and accountabilities with the various DFO sectors with respect to oceans are not always well defined. For example, the Oceans Management Program depends on sectors such as Ecosystems and Oceans Science, Strategic Policy and Ecosystems and Fisheries Management (e.g. Resource Management and Conservation and Protection Branches) to provide oceans-related services.

Arrangements for services required from other sectors are often done in an informal manner which can lead to unclear expectations and results. There are however good practices being employed for inter-sector oceans management activities. For example, the Conservation and Protection Branches in some regions clearly outline the surveillance and enforcement activities relating to Marine Protected Areas that will be carried out and how the results will be reported upon.

The absence of clearly documented roles, responsibilities and accountabilities creates uncertainty over what individuals and sectors should be doing with respect to oceans management and could result in key program activities not being delivered. Clearly defined roles, responsibilities and accountability over oceans management activities can mitigate the risk of key activities not being carried out.

Recommendation and action plan
Recommendation Management Action Plan
R-# 1 It is recommended that the Senior Assistant Deputy Minister, Ecosystems and Fisheries Management:
  • The mandate for Integrated Oceans Management (IOM) is found in the Oceans Act and is the Government of Canada’s approach to managing Canada’s oceans. It is an approach that calls for the Minister of Fisheries and Oceans to facilitate collaborative decision-making by regulators for how Canada’s marine resources should be sustainably developed.
  • The 1997 Oceans Act called for the development of plans to advance the integrated management of coastal and marine areas. High-level strategic ecosystem-based integrated management plans have been developed, with provinces/territories, indigenous groups and stakeholders, for five large oceans management areas. These plans identified priorities for action. Funding was not secured to fully implement these plans, although it was secured to increase the marine conservation agenda which was identified as a priority in some plans. DFO and planning partners are advancing implementation within existing resources.
1.1
Clarify DFO’s role in integrated oceans management (particularly with respect to Large Oceans Management Areas);
1.1

The Oceans Management Program will continue to conduct, in conjunction with Regions, priority setting exercises that are informed by the plans to ensure that resources that are not required to meet current Government priorities within the program will be directed towards these priority IOM plan activities. These priority setting exercises will be done based on bioregions instead of large oceans management areas. There are twelve oceans bioregions in Canada which have been determined through a science-based process and these bioregions will be the marine planning areas going forward. Some of these bioregions overlap with the five large oceans management areas. The Government of Canada has committed to “work with the provinces, territories, Indigenous Peoples, and other stakeholders to better co-manage our three oceans.” Co-management is aligned with the integrated oceans management approach described in the Oceans Act. The Department will develop strategies and options, in collaboration with other federal partners and in consultation with provinces, territories, Indigenous groups and other stakeholders, for how the Government can meet this commitment.

These actions will, together, clarify the Government’s intent for pursuing integrated oceans management, provide strategic direction to the Program and clarify staff roles and responsibilities related to integrated oceans management.

1.2
Update Canada’s Oceans Strategy and the accompanying Policy and Operational Framework for Integrated Management of Estuarine, Coastal and Marine Environment in Canada to provide strategic direction for the Oceans Management Program;
1.2
Canada’s Oceans Strategy set out the policy direction for ocean management in Canada in 2002. It is founded upon the principles of sustainable development, integrated management and the precautionary approach. Many jurisdictions, such as the United States and the United Kingdom, have updated their oceans management frameworks in recent years to reflect busier marine areas under increasing pressure. The overarching policy direction for integrated oceans management will be closely linked to the direction on co-management to be set under the response to recommendation #1. A renewed Canada’s Oceans Strategy and policy and operational frameworks will be pursued under this process.
1.3
Re-establish the Interdepartmental Committees for Oceans by updating their Terms of References and enhancing collaboration among federal departments to address government priorities;
1.3
The Oceans Management Program will re-establish the Interdepartmental Committees on Oceans (ICOs), including defining the scope and purpose of these committees, as part of the work to meet the Government’s commitment to better manage our oceans. These committees will be the federal venue for discussions related to this commitment and to the Government’s commitment to increase Canada’s marine protection of Canada’s marine and coastal areas from 1% to 5% by 2017 and 10% by 2020.
1.4
Prepare Terms of Reference for the Oceans Management Oversight Committee that sets out the purpose of the committee, roles and responsibilities, and processes for carrying out its duties; and
1.4
The Oceans Management Oversight Committee (OMOC) was established to provide a greater focus on Oceans Management Program issues. To further strengthen the OMOC, terms of reference including roles and responsibilities, administrative mechanisms, forward or recurring agenda items and linkages with the National Oceans Managers Committee, will be formalized.
1.5
Clearly define roles, responsibilities and accountabilities for inter-sector oceans management activities.
1.5

To enhance accountability over deliverables and use of funds, the Oceans Management Program will clearly define priorities with Regions and other sectors through the work planning process. Annual deliverables will be detailed in work plans or other formal agreements as needed.

The Oceans Management Program commits to conducting a review process at Q2 and Q4 (prior to year-end) of program delivery commitments and expenditures.

Office of Primary Interest: Senior ADM, Ecosystems and Fisheries Management
Due Date: March 31, 2017

6.2 Resources

The Oceans Management Program is financed through a combination of A and B-base funding. Reduction in resources and ongoing reliance on B-base resources puts the program at risk.

A-base funding is core funding provided to deliver a program, while B-base is non-permanent funding (with a set end date) to deliver specific activities related to the program.

Observations 6.2.1
Observations
High 6.2.1 Financial Resources
Reliance on B-base funding leaves the sustainability of the Oceans Management Program vulnerable. This has been identified by the Program as one of its most significant risks.

Since the implementation of the Oceans Act and the establishment of an Oceans Management Program in the 1990’s, much reliance has been placed on B-base funding through initiatives such as Canada’s Oceans Action Plan, HOTO and presently the NCP and the WCTSS

Based on the years under review, funding for the Oceans Management Program was as follows (including HOTO for 12-13 and 13-14; and NCP for 14-15):

Funding for the Oceans Management Program
Year A-base B-base Total
2012-13 $ 11,357,716 $ 850,301 $ 12,208,017
2013-14 $ 9,234,350 $ 772,163 $ 10,006,513
2014-15 $ 7,935,615 $ 2,630,810 $ 10,566,425

Core A-base resources have been reduced over the years through various budget alignment and reduction exercises. Allocation of resources varies among regions and is based on historical amounts, adjusted by alignment and reduction initiatives. There was no evidence that allocations were based on specific regional needs to address priorities or any other rationale.

The current Program priorities are focused on implementing commitments included in the NCP and the WCTSS. A-base resources are used to support these activities where B-base resources are not sufficient for their delivery. Oceans funding can be spent on other oceans priorities only after B-base requirements have been satisfied.

It was observed during the audit that transfers of funds from the Oceans Management Program to other programs for non-oceans related activities had taken place. For example, in 2014-15, $117K was transferred from the Oceans Management Program to another DFO program. The description on the transfer form (Financial Plan Input – Transfer or Adjustments) indicates that it was “O&M Surplus Transfer to (another Program) for radio purchases”. It was explained by Program staff that funds sometimes become surplus because they do not have the capacity (people) to spend it.

It is acknowledged that some transfers are unavoidable such as those in support of Departmental funding pressures. If funds are not being used for oceans management purposes in one region, closer monitoring during the year may have identified this and created opportunities for sharing funds with other regions.

Observations 6.2.2
Observations
High 6.2.2 Human Resources
In addition to the reduction in the Program’s A-base funding, there have been decreases in human resources where full-time equivalent (FTE) staff has been reduced by approximately 30%.

The Oceans Management Program’s FTE composition is made up of a wide range of skill sets and occupational categories. The occupational categories also vary significantly from one region to another as demonstrated in the following table.

Full-Time Equivalents (2015-16) Footnote *
Region CR Footnote ** AS PM PC CO BI EC EX Total
Pacific   2.0 2.0   2.0 2.0   0.25 8.25
C&A 0.5     0.5 1.0 4.0   0.3 6.30
Quebec   0.5 2.0 1.0   6.0   0.3 9.80
Gulf           5.0   0.3 5.30
Maritimes 1.0         10.0   0.3 11.30
NL           10.0   0.3 10.30
Subtotal 1.5 2.5 4.0 1.5 3.0 37.0   1.75 51.25
NCR   1.0 2.0 5.0     6.0 1.5 15.50
Total 1.5 3.5 6.0 6.5 3.0 37.0 6.0 3.25 66.75

In addition to the FTEs shown in the table, the Oceans Management Program at NHQ and in the regions relies on determinate (12.5 term FTEs) employees to deliver on its commitments. This makes the Program vulnerable to loss of knowledge and uncertainty as to whether the required expertise can be retained.

With the changing priorities for the Oceans Management Program, requirements for different skill sets have also changed. For example, with the NCP and WCTSS, the use of the contracts and transfer payment arrangements has increased for program delivery. Administering contracts and transfer payments require a different skill set than other aspects of oceans management. In addition, the requirement under the Oceans Act for DFO to disseminate information and the increased use of Geographic Information Systems necessitates skills and expertise in those areas.

It would be appropriate to examine the allocation of financial and human resources to ensure that they are aligned with the needs of the Program and they meet the necessary skills set requirements. A review could also help to ensure that resources are appropriately allocated to the regions in which they are required so as to avoid the lapsing of funds and subsequent transfer to other DFO programs.

Recommendation and action plan
Recommendation Management Action Plan
R-# 2 It is recommended that the Senior Assistant Deputy Minister, Ecosystems and Fisheries Management:  
2.1
Carry out a review of the allocation of resources (financial and human) to ensure that they are directed (in terms of activity and location) to where they are needed and that the mix of skills and expertise (occupational categories) are appropriate to meet program requirements.
2.1

To ensure resources are directed towards current program priorities, the Oceans Management Program will conduct an assessment of program requirements and capacity.

This will include examining the allocation of resources across bioregions to ensure that they align with the bioregional pressures and emerging priorities.

This will also include examining classifications and organization structures (e.g., whether the structural changes made in NHQ should be reflected within regions or if different structures may be required) to determine what is required moving forward to meet the future needs of the Oceans Management program so it can meet the evolving Government of Canada priorities.

Office of Primary Interest: Senior ADM, Ecosystems and Fisheries Management
Due Date: March 31, 2017

6.3 Administration of Grants and Contributions

The Oceans Management Program was provided with funding to enter into arrangements with indigenous groups, academic institutions, and other partners to deliver portions of the NCP and WCTSS programs.

Observations 6.3.1
Observations
Moderate 6.3.1 Grants and Contributions
There are challenges in delivering the Grants and Contributions (G&C) component of the programs for both NCP and WCTSS since there is no authority specific to the Oceans Management Program to enter into grants and contributions arrangements.

Under the NCP and WCTSS, funding was provided to DFO to enter into arrangements with indigenous groups, academic institutions, and other partners to deliver portions of these programs. When the NCP and WCTSS were established, the Department was advised that it must use existing G&C authorities to make payments. These authorities include:

  • The Academic Research Contribution Program (ARCP) – Ecosystems and Oceans Science Sector;
  • The Aboriginal Aquatic Oceans Resource Management (AAROM) - Ecosystems and Fisheries Management Sector; and
  • The Departmental Class Programs (Grants and Contributions) - Chief Financial Officer Sector.

Some challenges were encountered in using the Terms and Conditions (T&Cs) of other DFO programs since these were not always suitable to allow for payments to be made on behalf of Oceans Program activities. For example:

  • Some programs have a dollar limit on the authority;
  • Oceans Management Program staff do not have the appropriate knowledge or training for delivering Gs&Cs; and
  • NCP and WCTSS are not a priority to the program with the G&C authority resulting in delays in entering into G&C arrangements.

During the past several years, evaluations (there were no recent specific audits on these Programs) have been carried out of DFO’s Class Programs, AAROM and the ARCP by DFO’s Evaluation Branch. While no major issues were noted with the Class Program or AAROM, the January 2015 report on the ARCP noted deficiencies in its administration. The scope of the audit of Oceans Management overlapped that of the evaluation and similar issues were noted. These can be considered as lessons learned in the implementation of a G&C authority for the Oceans Management Program should one be approved. These include (adapted from DFO’s Evaluation of ARCP-January 2015 Footnote 3):

  • Ensuring that fairness and transparency is exercised in selecting recipients and avoiding the perception of favoritism;
  • Preparing clear and complete documentation covering all essential aspects of the G&C program’s governance and administration, including roles and responsibilities of program administrators and senior management; and standard operating procedures for the administration of the program; and
  • Identifying financial and performance reporting requirements.
Recommendation and action plan
Recommendation Management Action Plan
R-# 3 It is recommended that the Senior Assistant Deputy Minister, Ecosystems and Fisheries Management:  
3.1
Develop, in consultation with the Chief Financial Officer, a set of terms and conditions for an Oceans Management Program transfer payment program and request specific authority from Treasury Board to enter into grants and contribution arrangements.
3.1
Draft terms and conditions for a new Oceans Management Grants and Contribution Program have been developed in consultation with the Chief Financial Officer and will be submitted to Treasury Board for consideration.
Office of Primary Interest: Senior ADM, Ecosystems and Fisheries Management
Due Date: September 1, 2016

6.4 Protection of Marine and Coastal Areas

As a signatory to the United Nations Convention on Biological Diversity, Canada agreed to an international “Aichi Target 11” of conserving 10 percent of marine areas by 2020 through networks of protected areas and “other effective area-based conservation measures” integrated into the wider seascape. This target is applicable not only to DFO but to other departments and agencies who have responsibilities for conserving certain areas such as National Wildlife Areas and National Marine Conservation Areas. DFO’s portion of this target is 3% of marine and coastal territory.

Since November 2015, this goal for the conservation of coastal and marine areas has been revised to become 5% by 2017 and 10% by 2020.

observations 6.4.1
Observations
High 6.4.1 Plan for Achieving Target
While a number of steps are being taken to meet Canada’s target for protecting marine and coastal territory, there is no detailed plan in place demonstrating how the 3% target will be achieved.

Initially, the AICHI target of conserving 10 percent of marine areas was considered “aspirational” and non-binding but was aimed at inspiring broad-based action by all partners and stakeholders to conserve marine and coastal areas. Since November 2015, the Government of Canada has made these targets a priority and has accelerated the dates for attaining them. The Department has been directed to increase the proportion of Canada’s marine and coastal areas that are protected “to five percent by 2017, and ten percent by 2020 – supported by new investments in community consultation and science” Footnote 4.

DFO is already taking steps to achieve this target. MPAs are a key tool that Canada has committed to using to protect and conserve marine biodiversity. Currently, Canada has put in place MPAs that cover approximately 1% of Canada’s marine area. When other effective area-based conservation measures (e.g., some fisheries closures and critical habitat) are taken into consideration, the figure increases to an estimated 2%.

In addition, in 2015, the Canadian Science Advisory Secretariat undertook a process to establish a set of criteria that can be used for assessing fisheries closures to determine if they are eligible to contribute to the percentage of protected marine and coastal areas. These criteria are expected to be available in the Spring of 2016 and once applied against the fisheries closures, it can be decided which, if any, can contribute to achieving Canada’s target.

With funding provided under the National Conservation Plan, the Program estimates that Canada will achieve approximately 5% coverage through marine protected areas and “other measures” by 2020. This will fall short on what the expectations are for conserving marine and coastal waters.

In light of the new priority given to conserving marine and coastal areas, there is a need to adequately plan and collaborate, not only within the Ecosystems and Fisheries Management Sector (NHQ and Regions) but with other Sectors who have a role in identifying and conserving marine and coastal areas, to achieve the target. A formal plan would include a risk assessment and mitigation strategy, specific deliverables, the steps required to achieve them, accompanying timelines as well as monitoring and reporting commitments.

Recommendation and action plan
Recommendation Management Action Plan
R-# 4 It is recommended that the Senior Assistant Deputy Minister, Ecosystems and Fisheries Management:  
4.1
Prepare a plan for the Department that sets out the steps required to achieve the DFO portion of the Government of Canada’s target for conserving marine and coastal areas. This plan should include:
  • Actions to be taken including timelines;
  • Roles and responsibilities for those involved (e.g. EFM and EOS);
  • A risk analysis, with mitigation strategies, of not achieving the target; and
  • Requirements for monitoring and reporting against the target
4.1
The Government of Canada has committed increasing marine conservation from the current 1% to protect 5% of marine and coastal areas by 2017 and 10% by 2020. This commitment will be met through a combination of actions by federal departments, in addition to contributions from provinces and territories.

The Department has developed strategies and options, in collaboration with Federal partners, for how the Government can achieve these objectives. The strategies and options include a combination of marine protected areas and other effective area-based conservation measures, the roles of implicated programs, and assessment of risks and possible mitigation strategies. Implementation will require engagement of partners and stakeholders. A Federal-Provincial Task Group is in place to enable exchanges through all levels of government.

Appropriate monitoring and reporting requirements will be determined in conjunction with the assessment of the strategies and options by Treasury Board Secretariat.
Office of Primary Interest: Senior ADM, Ecosystems and Fisheries Management
Due Date: March 31, 2017

7.0 AUDIT OPINION

Based on the audit findings, our opinion is that there are some deficiencies in controls over the implementation of the program delivery requirements of the Oceans Management Program. Areas requiring improvement include governance; resource allocation; administration of grants and contributions and plans for achieving targets for the protection of marine and coastal waters.

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 with 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:

conclusions and opinions
  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 Needed 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.

criteria
Audit Criteria Conclusion on Audit Criteria Examples of Key Evidence/ Observations
Line of Enquiry 1 – GOVERNANCE AND STRATEGIC DIRECTION
Criterion 1.1: Appropriate oversight mechanisms are in place (internal and external) to effectively manage oceans’ activities. 3  
Criterion 1.2: Roles, responsibilities and accountabilities are clearly defined and documented. 3  
Criterion 1.3: Oceans Management activities are aligned with current departmental and government priorities; e.g., NCP; and WCTSS. 3  
Line of Enquiry 2 – PROGRAM DELIVERY
Criterion 2.1: Marine conservation measures (e.g., spatial management measures/areas) are implemented in accordance with the provisions of the Oceans Act and respective management plans. 3  
Criterion 2.2: Deliverables identified under the Health of the Oceans (extensions 2012-13 and 2013-14), National Conservation Plan and the World Class Tanker Safety System (specific to compilation and analysis of socio, economic, cultural and ecological data) initiatives are completed or on track to be implemented. 2  
Line of Enquiry 3 – INFORMATION MANAGEMENT/INFORMATION TECHNOLOGY
Criterion 3.1: Consistent national information systems, including Geospatial Information Systems, are in place or on track to be developed to assist in the gathering and dissemination of information on oceans matters. 2  
Criterion 3.2: Quality assurance processes are in place to ensure the reliability of information used for oceans management purposes. 2  
Line of Enquiry 4 – PERFORMANCE MEASUREMENT AND REPORTING
Criterion 4.1: A performance measurement strategy is in place and indicators are meaningful and realistic to assess the performance of oceans management. 2  

APPENDIX B – OCCUPATIONAL CATEGORIES

APPENDIX B – OCCUPATIONAL CATEGORIES
AS Administrative Services
BI Biological Sciences
CO Commerce
CR Clerical and Regulatory
EC Economics; Sociology; and Statistics
EX Executive
PC Physical Sciences
PM Program Administration