2006 November Report of the Auditor General of Canada

Improper and questionable payments

11.35 The Office of the Correctional Investigator, the Treasury Board Secretariat, and the Privy Council Office should submit a report to Parliament setting out the actions that will be taken to identify and recover, where possible, any amount of money improperly paid out, as identified in this report, and the time frame for accomplishing these tasks.
(11.12–11.34)

Each organization provided the same response. Agreed. The Office of the Correctional Investigator, the Treasury Board Secretariat, and the Privy Council Office will submit a report to Parliament setting out the actions that will be taken to identify and recover money improperly paid out, and the time frame for accomplishing these tasks.

11.36 The Office of the Correctional Investigator, Public Safety and Emergency Preparedness Canada, and the Treasury Board Secretariat should review the questionable payments for cash-out of annual leave to the former Correctional Investigator for 1990–91 to 1997–98, to determine if the amounts paid out to him were warranted.
(11.23–11.24)

Each organization provided the same response. Agreed. The Office of the Correctional Investigator, in conjunction with the Treasury Board Secretariat and Public Safety and Emergency Preparedness Canada, will review the cash-out of annual leave to the former Correctional Investigator for 1990–91 to 1997–98.

Personal use of a government vehicle

11.44 Public Safety and Emergency Preparedness Canada should review the basis on which it calculated the former Correctional Investigator's taxable benefits for the use of the government vehicle. PSEPC should correct the amounts of taxable benefits it reported for all applicable years.
(11.42–11.43)

Public Safety and Emergency Preparedness Canada's response. The Department relied on the information provided by the former Correctional Investigator to calculate the original taxable benefit amount and has no documentation on which to base a recalculation. The matter will be referred to the Canada Revenue Agency for any action deemed appropriate.

Human resources practices

11.57 Public Safety and Emergency Preparedness Canada should certify and process only human resources and staffing actions that comply with Treasury Board and Public Service Commission policies and practices.
(11.50–11.56)

Public Safety and Emergency Preparedness Canada's response. Agreed. The Department will only certify and process staffing actions that are consistent with the Office of the Correctional Investigator's (OCI) Appointment Delegation and Accountability Instrument, and OCI staffing policies. Where there are no OCI policies, Treasury Board and Public Service Commission policies that are relevant will apply.

11.63 The Office of the Correctional Investigator (OCI), Public Safety and Emergency Preparedness Canada, and the Treasury Board Secretariat should immediately ensure that the OCI has an effective management control framework in the key areas of financial management and human resources management.
(11.50–11.62)

Office of the Correctional Investigator's response. Agreed. Since the appointment of the current Correctional Investigator, the Office of the Correctional Investigator undertook, in consultation with the Treasury Board Secretariat (TBS) and Public Safety and Emergency Preparedness Canada, an extensive initiative to modernize the Office's management practices and the implementation of more effective internal control mechanisms. The modernization of the Office included a complete review of its governance structure, financial and human resource management framework, and a re-examination of performance measurement and reporting requirements consistent with government-wide TBS initiatives. The Office has sought third-party independent advice on the adequacy of its current internal control mechanisms.

Public Safety and Emergency Preparedness Canada's response. Agreed. Public Safety and Emergency Preparedness Canada (PSEPC) will provide advice and assist OCI in establishing more effective management practices and control mechanisms. In exercising section 33 authority, PSEPC financial officers will ensure the adequacy of section 34 account verification and ensure that it is being properly and conscientiously followed.

Treasury Board Secretariat's response. Agreed. The Treasury Board and its Secretariat provide general oversight, not day-to-day supervision or control, of departments. Ministers are accountable for respecting Treasury Board financial and administrative policies and, in turn, all deputy heads, including the Correctional Investigator, are expected to follow Treasury Board financial management policies. Bill C-2, The Federal Accountability Act, should it come into force, will reinforce the responsibilities and accountabilities of deputy heads, as "Accounting Officers," in such areas as compliance with government policies, internal control, and signing departmental accounts. In addition, the Federal Accountability Action Plan has mandated a senior committee of deputy ministers to strengthen and streamline Treasury Board financial management policies. This includes an effective financial management control framework. The Treasury Board Secretariat will work with Public Safety and Emergency Preparedness Canada and the Office of the Correctional Investigator to ensure financial management roles and accountabilities are clearly understood.

As a separate agency, however, accountability for human resource management rested solely with the Correctional Investigator. Neither the Treasury Board Secretariat nor the Public Service Human Resources Management Agency of Canada (PSHRMAC) had the authority or accountability to oversee the human resource practices of the OCI. However, PSHRMAC is available to provide advice and guidance to OCI to set up an effective human resources management framework.

Comptrollership and management

11.77 The Treasury Board Secretariat should ensure that every small independent organization has a senior financial officer formally designated and appropriately trained on his or her responsibilities and duties.
(11.68–11.76)

Treasury Board Secretariat's response. Agreed. As noted in our response to the recommendation at paragraph 11.63, Treasury Board financial management policies are being reviewed by a senior committee of deputy ministers. This review includes the consideration of a new Chief Financial Officer Model for the Government of Canada, including their appointment, competencies, responsibilities, and accountabilities. In the meantime, the current Treasury Board Policy on Responsibilities and Organization for Comptrollership requires deputy heads of all organizations, including the Office of the Correctional Investigator, to designate a senior financial officer having a direct reporting relationship to the deputy head.

11.78 The Treasury Board Secretariat should advise and consult with management of small independent agencies to ensure that they fully understand their responsibilities if they become aware of inappropriate activities by the head of their agencies.
(11.68–11.76)

Treasury Board Secretariat's response. Agreed. The Treasury Board Secretariat will work with small departments and agencies to ensure that the roles and accountabilities of senior financial officers under the current policy are clearly understood. This includes the steps that should be taken when the senior financial officer believes the actions of the deputy head place the department at risk or violate the spirit or form of legislation or policy.

11.86 Public Safety and Emergency Preparedness Canada should take greater care in fulfilling its role in supplying financial and human resources services. The Department should challenge and, if necessary, refuse to process financial or human resources requests that do not comply with applicable Treasury Board policies and practices and the Financial Administration Act.
(11.79–11.85)

Public Safety and Emergency Preparedness Canada's response. Agreed. The Department has issued a directive to its human resources (HR) personnel that states that, as HR service providers, their role is to ensure that the advice and services provided to each agency respect the legislative, policy, and regulatory context as well as public service values and ethics, collective agreements, staffing values, and best practices. It has also taken steps to ensure that its financial officers are informed of their respective responsibilities related to the provisions of financial services.

11.87 The Office of the Correctional Investigator should enter into a signed Memorandum of Understanding with Public Safety and Emergency Preparedness Canada (PSEPC). This agreement should specify the financial and human resources services PSEPC will supply, the service standards that should be met, and the roles and responsibilities of each party.
(11.79–11.85)

Organizations' response. The Office of the Correctional Investigator (OCI) and Public Safety and Emergency Preparedness Canada will enter into a Memorandum of Understanding (MOU), which outlines each organization's role and responsibilities, as well as the finance, human resources, information management/information technology, and security services to be provided. The OCI has sought third-party independent advice on this MOU. This will provide further assurance that this new MOU best responds to this important recommendation of the Auditor General.

11.92 The Treasury Board Secretariat should reinforce existing guidelines on the responsibilities and accountabilities of service providers.
(11.79–11.91)

Treasury Board Secretariat and Privy Council Office provided the same response. Agreed. Legislation and current Treasury Board policies outline certain requirements relating to the provision of services to others and the exercising of duties. The Treasury Board Secretariat (TBS) will review current guidance to determine if revisions are required. In addition, the TBS will work with departments and agencies to provide a better understanding of these responsibilities and accountabilities to reduce the likelihood of similar incidents occurring in the future. The TBS will also remind departments and agencies of the need for Memoranda of Understanding when services are provided to or for others. Finally, the TBS will work with the Privy Council Office to update management and financial accountabilities for the Guide Book for Heads of Agencies should Bill C-2, the Federal Accountability Act, come into force.

11.93 Public Safety and Emergency Preparedness Canada (PSEPC) should enter into a Memorandum of Understanding with each of the other two small independent agencies to which it provides financial and human resources services. These agreements should specify the financial and human resources services PSEPC will supply, the service standards that should be met, and the roles and responsibilities of each party.
(11.88–11.91)

Public Safety and Emergency Preparedness Canada's response. Agreed. PSEPC and the two agencies will enter into Memoranda of Understanding that will outline each organization's role and responsibilities as well as the finance, human resources, information management/information technology, and security services to be provided.

11.99 The Privy Council Office, in consultation with the Treasury Board Secretariat, should clearly establish the accountability of the heads of small independent agencies on matters related to financial management and human resources management.
(11.94–11.98)

Privy Council Office's response. Agreed. The Privy Council Office will revise its Guide Book for Heads of Agencies, which sets out the role of heads of agencies with respect to operations, structures, and responsibilities in the federal government, including a section on the exercise of their responsibility and accountability as defined by statute and by convention. These revisions will provide more details on agency heads' accountability for the management of their organization and clarify their roles and responsibilities as deputy heads.

11.100 The Privy Council Office should ensure that it appropriately advises and trains full-time Governor in Council appointees about their expected standards of conduct as holders of public office.
(11.94–11.98)

Privy Council Office's response. Agreed. The Privy Council Office will provide more detailed information when advising appointees, prior to their appointment, of the conflict of interest rules and other standards of conduct that apply to them. Upon appointment, appointees are contacted by the Office of the Ethics Commissioner to discuss any concerns they may have with respect to their office. The Privy Council Office will provide further written advice to appointees on these matters, following their appointment.

In addition, the section in the Guide Book for Heads of Agencies that explains how public service values and probity apply to them will be enhanced to provide more detailed advice. Also, the booklet entitled Terms and Conditions of Employment for Full-Time Governor in Council Appointees will be amended by adding a section on standards of conduct.

The Canada School of Public Service provides formal orientation and training sessions for heads of agencies. It is proposed that such training become mandatory for heads of agencies. Individual sessions with Treasury Board Secretariat and Privy Council Office officials, which are currently available upon request, will be provided to agency heads upon their appointment.

11.108 The Treasury Board Secretariat should begin monitoring small independent agencies to assess the effectiveness of their management and financial control frameworks, and to ensure they comply with applicable Treasury Board policies and practices. The Treasury Board Secretariat should also conduct internal audits of small independent agencies.
(11.104–11.107)

Treasury Board Secretariat's response. Agreed. Small agencies, including the Office of the Correctional Investigator (OCI), are monitored through the Management Accountability Framework (MAF) exercise that establishes accountabilities between departments and agencies, including their deputy heads, and the Treasury Board Secretariat in relation to management and financial control frameworks. It should be noted that the human resources component of the MAF does not apply to separate agencies such as OCI.

The new Treasury Board Policy on Internal Audit that came into effect in April 2006 has a particular focus on small departments and agencies. Under the policy, the Office of the Comptroller General will undertake internal audits of small departments and agencies. The first such audit has been launched. New protocols for internal audit services to small departments and agencies have been developed and financial assistance totalling $27 million has been made available to all departments and agencies to build internal audit capacity.

11.109 The Treasury Board Secretariat and the Privy Council Office should ensure there is periodic monitoring of small independent agencies.
(11.104–11.107)

Treasury Board Secretariat's response. Agreed. Small independent agencies are monitored through the Management Accountability Framework (MAF) exercise. The human resources component of the MAF does not apply to separate employers such as the Office of the Correctional Investigator. However, the Public Service Human Resources Management Agency of Canada (PSHRMAC) does monitor management of departmental performance management programs for executives in all departments and agencies that form part of the core public service. As well, the PSHRMAC is completing a classification monitoring exercise in which classification programs in a sample of 13 small departments and agencies were monitored. These monitoring programs are ongoing, but do not extend to separate employers. Finally, the Treasury Board Policy on Internal Audit provides for closer monitoring of small departments and agencies through audits undertaken by the Office of the Comptroller General.

Privy Council Office's response. The Privy Council Office will be informed of any anomalies identified through this monitoring, as outlined in the Treasury Board Secretariat's response, concerning heads of agencies appointed by the Governor in Council.

11.116 The Privy Council Office should issue clear guidelines on policies for full-time Governor in Council appointees, regarding management and special leave and cash-out of annual leave. The guidelines should specify who approves leave and cash-out of annual leave for Governor in Council appointees who are heads of departments and agencies. The Privy Council Office should monitor the way full-time Governor in Council appointees take management and special leave, and how they cash out their annual leave.
(11.110–11.115)

Privy Council Office's response. Agreed. Heads of agencies are responsible for managing leave and cash-out of annual leave of appointees within their organization. The Privy Council Office is developing guidelines that will provide guidance to deputy heads with respect to the approval, usage, and reporting of their own leave and cash-out of annual leave. This reporting requirement will serve as the basis for the monitoring of these matters.

The Office of the Correctional Investigator (OCI) shares the concerns raised by the Auditor General's report, and is fully committed to do what is necessary to address each recommendation and ensure public confidence in this important federal institution.

The OCI fully agrees with the four recommendations of the Office of the Auditor General of Canada (OAG) specifically directed at the OCI. The OCI supports new initiatives and OAG recommendations that will enhance accountability and transparency of government agencies and departments. This Office has specifically indicated to all involved departments that it wishes to fully participate in the development of government-wide enhanced accountability measures that will result in improved financial and human resource management. This Office will cooperate with efforts to identify and recover money improperly paid out, as recommended by the OAG.

It is important to note that during the six-year period audited, the Office fulfilled its legal mandate by responding to more than 40,000 offender complaints. The OCI staff conducted more than 16,000 individual interviews and spent more than 2,100 days visiting penitentiaries. It also reviewed almost 750 Correctional Service Canada investigative reports dealing with offender injuries or deaths.

Shortly after his appointment, the current Correctional Investigator was briefed by management on the findings of the Auditor General's audit of OCI human resource practices. Work then began to develop a number of initiatives to modernize and enhance the Office's administrative practices, including implementing more effective internal control mechanisms. The modernization of the Office has included a complete review of its governance structure, financial and human resource management framework, and a re-examination of performance measurement and reporting requirements consistent with government-wide TBS initiatives.

The key initiatives adopted by the current Correctional Investigator since his appointment to strengthen governance, financial management and accountability, human resources management, and performance measurement and reporting can be reviewed at our Internet site at www.oci-bec.gc.ca.