PACC Committee Report

OBSERVATIONS AND RECOMMENDATIONS

The new policies on internal audit and evaluation represent a number of important departures from the past. In this report, the Committee will first consider both policies generally and then consider each in turn.

One of the most important changes to the policies involves the elimination of Treasury Board Secretariat’s Review Policy, which encompassed the two previous policies on internal audit and evaluation. In his 1996 Report, the Auditor General was critical of the Review Policy because it “introduced confusion as to what internal audit should be doing.”[1] The elimination of the Review Policy should remove this confusion and is thus a welcome change.

The Committee notes that Treasury Board Secretariat consulted with the Office of the Auditor General in developing the new policies and that the Auditor General has, on the whole, given his approval. The Committee also notes that an organization for evaluation specialists, the Canadian Evaluation Society, has commended the Treasury Board Secretariat on the new evaluation policy. Nevertheless, as Mr. Desautels emphasized throughout his testimony, a great deal will depend on how rigorously the new policies are implemented, both by departments and by Treasury Board Secretariat.

While the Committee welcomes many of these policy changes, it notes that the new policies do not address many of the persistent shortcomings uncovered by earlier audits. These shortcomings stem not so much from flaws in the internal audit and evaluation policies as from incomplete implementation and lack of attention.

A requirement embedded in the new policies calling for the creation within Treasury Board Secretariat of two centres of excellence, one for internal audit, the other for evaluation, has the promise of correcting these problems.

The Centre of Excellence for Internal Audit is tasked with providing advice to departments, developing a human resource strategy for the internal audit community, developing a framework for evaluating the effectiveness of the new policy within five years, helping departments evaluate the performance of their internal audit functions, and establishing a monitoring process that will alert Treasury Board Secretariat to risk, control, or management problems in departments.

The role of the Centre of Excellence for Evaluation is less defined in the new Evaluation Policy, and consists of providing leadership, guidance and support to the practice of evaluation. The Deputy Comptroller General informed the Committee that the centres would be allocated a total of $4.6 million for 2001–2002 and the same amount for 2002–2003.

Both policies require Treasury Board Secretariat to monitor their implementation. While the Committee welcomes these requirements, it notes that the Secretariat has not performed this function well in the past. In his 1998 Report on internal audit, the Auditor General repeated his 1996 observation that the Secretariat had not reviewed departmental implementation of its audit policy and standards or the effectiveness of internal audit.[2] In Chapter 20 of his December 2000 Report, the Auditor General commented that over the past four or five years Treasury Board Secretariat’s “attention to evaluation was limited.” Previous audit reports suggested that the Secretariat was not adequately monitoring implementation of its evaluation policy. While the new policies direct the Secretariat to monitor internal audit and evaluation capacity in departments and their products, actual policy implementation is not mentioned. With past observations in mind, the Committee therefore strongly recommends:

RECOMMENDATION 1

That Treasury Board Secretariat actively monitor the implementation of the new internal audit and evaluation policies in departments and agencies.

Mr. Desautels commented that “despite Parliament’s clear interest in the subject, [Treasury Board Secretariat] had not informed Parliament since 1996 about the relatively weak state of evaluation in the federal government.” The Committee believes that Parliament must be kept regularly informed of progress in implementing the two new policies and accordingly recommends:

RECOMMENDATION 2

That Treasury Board Secretariat use data gathered by the Centre of Excellence for Internal Audit and the Centre of Excellence for Evaluation to inform Parliament, in its annual report on the implementation of results-based management in the federal government (Managing for Results), of progress being made across government in implementing new policies on internal audit and evaluation. Reporting of this information should begin with the report for the fiscal year ending 31 March 2002.

The centres of excellence have been given significant responsibilities with regard to internal audit and evaluation in government. They have also been allocated significant funding to fulfill their mandates. Parliament needs to be kept informed of the centres’ progress in achieving their objectives. The Committee therefore recommends:

RECOMMENDATION 3

That Treasury Board Secretariat include a discussion, in its annual report on the implementation of results-based management in the federal government (Managing for Results), of the performance of the Centre of Excellence for Internal Audit and the Centre of Excellence for Evaluation against the responsibilities of the centres as set forth in the Policy on Internal Audit and the Evaluation Policy. Reporting on this performance should begin with the report for the fiscal year ending 31 March 2002.

The Committee is pleased to see that both new policies will be subject to formal evaluation within five years of implementation. Regular monitoring of, and reporting on, the implementation of the policies should greatly assist in the evaluation process. A formal evaluation should provide an opportunity to learn what has worked and what has not, and to make the appropriate policy adjustments. Since Parliament has a strong interest in internal audit and evaluation, the Committee makes the following recommendations: