CAUBO Internal Audit Seminar – VFM/Performance AuditingCarol BellringerJune 15, 2008

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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

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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

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Process overview

Determining audit focus Audit planning Audit field work (evidence gathering) Audit reporting Public reporting (report to the

legislature)

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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

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Determining audit focus

Internal sign-off with executive team Priorities within the office Staffing considerations Budget and scheduling issues Sensitivities?

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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

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Audit planning

Objectives Scope Approach Timeliness

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Audit field work (evidence)

Facts Findings Conclusions Recommendations KEY COMMUNICATIONS:– Ongoing with officials on emerging findings– Senior officials updated periodically– Wrap up with officials

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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

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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

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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

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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

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Measuring success

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

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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

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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

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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?

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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

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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

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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

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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

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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?

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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

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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

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Survey Findings

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Survey Findings

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Survey Findings

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Survey Findings

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Survey Findings

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Survey Findings

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Survey Findings

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Other reports

Enhancing Audit Committee Practices in the Public Sector (2006)

A Guide to Leading Edge Internal Auditing in the Public Sector (2006)

www.oag.mb.ca (reports and resources)

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Other reports

British Columbia:– Government's Post-secondary Expansion - 25,000

Seats by 2010 (December 2006

– Ministry of Advanced Education, Training and TechnologyValue-for-Money AuditAccountability Relationship of the Ministry With the Science Council of British ColumbiaMinistry Role in the College System

– http://www.bcauditor.com/AuditorGeneral.htm

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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

– www.oag.ab.ca (searched for education – 38 reports)

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Other reports

Ontario:– 2007: Universities, Management of

Facilities– 2006: Community Colleges, Acquisition of

Goods and Services– 2005: Student Assistance, follow up– www.auditor.on.ca