Report 2—Disposing of Government Surplus Goods and Equipment

At a Glance Report 2—Disposing of Government Surplus Goods and Equipment

What we examined (see Focus of the audit)

All Government of Canada departments and agencies have movable assets (materiel), including vehicles, furniture, machinery, and other goods and equipment. When a federal organization no longer requires assets, it can dispose of these surplus assets by either transferring them to other departments or agencies, or selling, donating, recycling, or scrapping them.

This audit focused on whether selected federal organizations disposed of surplus goods and equipment at the appropriate time in a manner that maximized benefits. These benefits include selling assets for the best possible return, reusing or refurbishing assets that were still in good condition, donating assets to organizations that could benefit from them, and disposing of assets in an environmentally sustainable way.

Why we did this audit

This audit is important because federal organizations own large numbers of assets and have a responsibility to Canadian taxpayers for managing and disposing of these assets in an efficient, cost-effective, and responsible manner. This responsibility includes considering the financial and environmental impacts of disposal decisions on the Government of Canada as a whole and not just on an individual department or agency.

This audit is also important because the practices of the four federal organizations we selected provide some insight into how the government as a whole is using and disposing of its assets.

What we concluded

We concluded that the selected federal organizations did not always dispose of surplus goods and equipment in a manner that maximized benefits. The incentives to sell surplus assets outweighed other methods, such as reusing, refurbishing, and donating. There are more opportunities inside and outside the Government of Canada to reuse assets and maximize their use. The Canada Revenue Agency is one example of how to increase the reuse and refurbishment of assets within one federal organization.

We were unable to conclude whether federal organizations under audit disposed of surplus goods and equipment at the appropriate time, as they did not maintain sufficient documentation.

What we found about…

Selling and transferring assets

Overall, we found that the Government of Canada’s accounting suggested that federal departments and agencies sold their surplus assets for less than two thirds of the value estimated as the remaining future benefit of the assets to the government. On the basis of our analysis, we found that all federal organizations chose to sell surplus assets rather than transfer them to other federal organizations to extend the assets’ use. In addition, most of the organizations we selected did not always do a cost analysis to justify the decision of selling assets instead of choosing another disposal method.

We also found that the Canada Revenue Agency had adopted practices to reuse its own assets. These practices resulted in savings of more than $4.5 million over three years.

This finding matters because other organizations, both inside and outside the federal government, might be able to use assets that are no longer of use to a department or agency or to a program. The cost of reusing assets can be lower than the cost of selling them or of buying new ones. Transferring assets, when possible, can save time and money and is therefore in the best interest of Canadian taxpayers.

  • Federal organizations chose to sell surplus assets rather than dispose of them through other methods

    Recommendation. Public Services and Procurement Canada, the Royal Canadian Mounted Police, and Shared Services Canada should review their asset life-cycle processes, including procurement, to facilitate and encourage the transfer and reuse of assets.

    Recommendation. The Canada Revenue Agency, Public Services and Procurement Canada, the Royal Canadian Mounted Police, and Shared Services Canada should review internal processes to facilitate the donation of surplus assets.

  • Three of the four federal organizations did not keep detailed records to support disposal decisions

    Recommendation. Public Services and Procurement Canada, the Royal Canadian Mounted Police, and Shared Services Canada should keep sufficient documentation to justify the disposal methods that they selected. The organizations should consider standardizing their forms to ensure consistency, and consider all factors when making disposal decisions, such as disposal cost, asset value, and environmental impact.

GCSurplus operations

Overall, we found that Public Services and Procurement Canada was effective at selling the goods that it received through GCSurplus. However, we found that the Department had little incentive to pursue other disposal methods because the Department depended entirely on commissions from the sale of government assets to operate GCSurplus.

This finding matters because GCSurplus is uniquely positioned to dispose of assets on behalf of the Government of Canada. By offering more services that encourage the donation and reuse of assets, GCSurplus could further maximize the benefits from the disposal of surplus assets for both the federal government and Canadian taxpayers.

Entities’ Responses to Recommendations

The entities agree with our recommendation(s) and has responded (see List of Recommendations).

Related Information

Report of the Auditor General of Canada
Type of product Performance audit
Topics
Entities
Completion date 15 March 2018
Tabling date 29 May 2018

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