2006 November Report of the Auditor General of Canada

Meeting regulatory responsibilities

8.27 Health Canada should establish program baselines for Product Safety, Drug Products, and Medical Devices programs by defining the required level of activities that the programs must carry out in order to meet their regulatory responsibilities of protecting the health and safety of Canadians. It should also identify the targeted performance for these activities, and the resources needed to do this work.
(8.14–8.26)

Agreed. A review of the funding allocated to the three regulatory programs is currently underway, as well as activities to establish program baselines. The goal is to complete these by 31 March 2008.

Using plans in resource allocation decisions

8.38 Health Canada should ensure that the operational plans for its regulatory programs include comprehensive information on program objectives and measurable targets for expected results. Health Canada should use these operational plans to make resource allocation decisions.
(8.31–8.37)

Agreed. Health Canada will continue to improve the operational planning process. In 2006–07, the Department is strengthening the process through the launching of a combined strategic and operational planning process that includes performance measures, indicators and measurable targets, as well as decisions on resource allocations. The completion date for implementing the new process is fiscal year 2007–08.

Using financial and performance information in resource allocation decisions

8.43 Health Canada should review the core funding allocated to regulatory programs to ensure that all programs receive sufficient funding to meet regulatory responsibilities and to adequately protect the health and safety of Canadians.
(8.40–8.42)

Agreed. A review of funding allocated to regulatory programs, including core funding, is currently underway and the goal is to complete it by 31 March 2008.

8.46 Health Canada should, in consultation with clients, set user fees for Drug Products and Medical Devices program services that are based on clear and measurable service standards.
(8.44–8.45)

Agreed. Health Canada recently approved a new cost recovery strategy and framework for all its user fees programs, including drugs and medical devices, to align it to the Treasury Board Policy on Service Standards for External Fees and to develop a full costing model. The work on the cost recovery strategy and framework is expected to be completed by 31 March 2008.

Building on stakeholder consultations in 2005, Health Canada is renewing its cost-recovery regime for drugs and medical devices in accordance with the Treasury Board policy and the User Fees Act. Health Canada has launched consultations with stakeholders in 2006–07 with a goal to complete the work over the next two fiscal years (2007–08 and 2008–09).

8.53 Health Canada should ensure that it complies with the conditions of Treasury Board decisions when allocating and reallocating funds internally.
(8.47–8.52)

Agreed. As part of its Financial Management and Control Framework, the Department is introducing a Budget Management Framework with guidelines on resource allocation and monitoring of Treasury Board decisions. The Framework will be developed by 1 April 2007, and implementation will begin in fiscal year 2007–08.

8.57 Health Canada should determine the full cost of delivering its regulatory programs and use this information in its decisions on resource allocation.
(8.54–8.56)

Agreed. In addition to the review of funding allocated to regulatory programs and the current exercise to establish program baselines, the Department is also implementing its new cost recovery strategy and framework, including the establishment of a full costing model. The implementation of the full costing model is scheduled for fiscal year 2007–08.

8.63 Health Canada should develop meaningful indicators with targets to measure efficiency and results. The Department should use this information in making resource allocation decisions.
(8.58–8.62)

Agreed. Improvements to the existing performance measurement frameworks are currently underway and will include expected results, indicators, and targets where feasible. Initiatives related to performance measurement will be implemented by 31 March 2008 and performance will be measured on an ongoing basis.

8.68 Health Canada should document the rationale for any allocation and reallocation decisions on its programs, including the long-term consequences of the funding decisions that affect the program's outcome and its ability to adequately achieve its objectives.
(8.64–8.67)

Agreed. Improvements have been made since 2004–05 in the areas of operational planning, corporate risk profiling, performance measurement, and the resource allocation process. Health Canada will build on the departmental strategic and operational planning process to strengthen documentation on the rationale for resource allocation decisions. Initiatives related to the documentation of rationale for resource allocation and reallocation decisions will be implemented in the 2007–08 operational planning process.

8.72 Health Canada should standardize its resource allocation process to ensure that the information given to senior management is consistent from branch to branch.
(8.69–8.71)

Agreed. Health Canada will continue to build on the strategic and operational planning process to ensure the standardization of the resource allocation process. The 2007–08 operational planning process will be standardized.

Reporting program results

8.84 Health Canada should develop a reporting mechanism that would require program managers to inform the Departmental Executive Committee systematically about the

• level of financial resources allocated to each program,
• results achieved with the funds, and
• extent to which each program has met its regulatory responsibilities, including significant gaps and their consequences.
  (8.73–8.83)

Agreed. Directorates are now reporting program results and their regulatory responsibilities to their Branch Executive Committee. With the strategic and operational planning process, results will be reported to the Departmental Executive Sub-committee on Finance, Evaluation and Accountability and to the Senior Management Board for final decision. The new operational planning process will be implemented in fiscal year 2007–08. Program results are also reported in the Departmental Performance Report.