CAUBO Internal Audit Seminar – VFM/Performance Auditing Carol Bellringer June 15, 2008

2 Outline  VFM/Performance auditing in the Office of the Auditor General, Manitoba  Process overview  Measuring success  Examples of VFM audits issued by the OAG and other legislative auditors

3 VFM auditing at the OAG  OAG mandate – prohibits comments on the merit of policy  VFM vs Special Audits  Evolution of practice – VFM auditing standards/assurance standards  Purpose  Challenges – future auditing standards  Solutions

4 Process overview  Determining audit focus  Audit planning  Audit field work (evidence gathering)  Audit reporting  Public reporting (report to the legislature)

5 Determining audit focus  Knowledge of business including issues and risks  Audit objectives  KEY COMMUNICATIONS –Correspondence with senior officials –Meet with senior officials, discuss operational issues and risks

6 Determining audit focus  Internal sign-off with executive team  Priorities within the office  Staffing considerations  Budget and scheduling issues  Sensitivities?

7 Audit planning  Criteria  Audit Plan  KEY COMMUNICATIONS: DM/CEO meeting to discuss draft criteria  DM/CEO acknowledgement of the suitability of the audit criteria and audit plan

8 Audit planning  Objectives  Scope  Approach  Timeliness

9 Audit field work (evidence)  Facts  Findings  Conclusions  Recommendations  KEY COMMUNICATIONS: –Ongoing with officials on emerging findings –Senior officials updated periodically –Wrap up with officials

10 Audit field work (evidence)  Internal updates  Consistency with previously issued reports  Differences from past reports  Have similar recommendations been made before? Why not implemented?  ROOT CAUSE

11 Audit reporting  Draft report  Final report  Meetings with officials to discuss draft  DM/CEO given the opportunity to include comments – meet if necessary  Final report to Ministers – 14 days required by Auditor General Act

12 Audit reporting  Editing in-house – result is as intended to be issued  Consider errors/tone/ “big picture”  Anyone “named” given the chance to review the report  Tight time frame but with some flexibility  GOAL is buy-in

13 Public reporting (RTL)  Must be tabled in the Legislature prior to public distribution  In-session vs out-of-session  Media  Mailing to interested parties (“green policy”)  Cannot be accessed under FIPPA until released

14 Measuring success  Follow-up process starting in year 3  Public Accounts Committee  Department of Finance follow-up  Informal follow-up  Other measures

15 VFM audits issued by the OAG  Audit of the Department of Conservation’s Management of the Environmental Livestock Program  Audit of the Province’s Management of Contaminated Sites and Landfills  Audit of Workplace Safety and Health  Audit of the Child and Family Services Division, Pre-Devolution Child in Care Processes and Practices

16 Other audits issued by the OAG  Special Audit: Rural Municipality of La Broquerie  Special Audit: Image Campaign for the Province of Manitoba  Special Audit: Property Transactions in the Seven Oaks School Division

17 Livestock Program  Regulation vs other Canadian jurisdictions  Processes to ensure operators comply with the key provisions of the Regulation?  Did Department use information to further its efforts to protect surface and groundwater from contamination?  Sufficient consultation on common issues?

18 Livestock Program - Regulation  Livestock Manure and Mortalities Management Regulation under The Environment Act  Legislation to ensure the protection of the environment from potential harmful effects of livestock manure and mortalities  Legislation was more comprehensive and proactive than in some other provinces

19 Livestock Program - Regulation  Areas not addressed or more stringent in other jurisdictions: –Controls where operators have multiple species –Minimum acceptable storage capacity for manure storage –Controls to address the effects of chemical fertilizers combined with manure application –Submission of contingency plans –Controls re: winter spreading

20 Livestock Program - Issues  Described the Regulation in the context of other Provincial initiatives  Subsequent issuance of the report of the Clean Environment Commission  Moratorium by the Provincial Government on expansion in certain areas  Lobbying by producers & environmentalists

21 Contaminated Sites  Entities in the Government Reporting Entity and Municipalities  Required to comply with Public Sector Accounting (PSA) Standards  Must report and/or disclose in Public Accounts its environmental liabilities  Province requires municipalities to comply with PSA standards  Includes Manitoba’s Universities and Colleges

22 Objectives  Whether processes were sufficient to identify contaminated sites and estimate costs associated with remediation of these sites for financial statement accounting/disclosure?  Monitoring by the Department of Conservation to ensure compliance?  Licensing, permitting and monitoring landfills to ensure compliance?  Finance’s compilation of costs re: remediation adequate? Province and municipalities reporting liabilities re landfills?

23 Conclusions  Policies and procedures for the management of contaminated sites were not sufficient  Majority, policies and procedures not in place  Majority not preparing financial statements in accordance with PSA standards

24 Conclusions  Conservation’s monitoring procedures were not sufficient  Finance’s processes for the compilation of costs were sufficient  Did not address liabilities for mines or buildings containing asbestos

25 Survey Findings

26 Survey Findings

27 Survey Findings

28 Survey Findings

29 Survey Findings

30 Survey Findings

31 Survey Findings

32 Other reports  Enhancing Audit Committee Practices in the Public Sector (2006)  A Guide to Leading Edge Internal Auditing in the Public Sector (2006)  (reports and resources)

33 Other reports British Columbia: –Government's Post-secondary Expansion - 25,000 Seats by 2010 (December 2006 –Ministry of Advanced Education, Training and Technology Value-for-Money Audit Accountability Relationship of the Ministry With the Science Council of British Columbia Ministry Role in the College System –

34 Other reports Alberta: –Accountability in the Education System (2004) –April 2008 report:  Non-credit programs (clarify standards and expectations, monitor)  Recommendations from Financial Statement audits, information technology – (searched for education – 38 reports)

35 Other reports Ontario: –2007: Universities, Management of Facilities –2006: Community Colleges, Acquisition of Goods and Services –2005: Student Assistance, follow up –