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1991 Report of the Auditor General of Canada

Main Points

3.2 Department of Energy, Mines and Resources - The Management of Federal-Provincial Contribution Programs - Our follow-up indicates an overall improvement in the federal administration of the Nova Scotia Development Fund and the Newfoundland Offshore Development Fund (paragraphs 3.34 to 3.55).

3.3 The Management and Use of Telecommunications in the Federal Government - Government Telecommunications Agency (GTA) has been designated as a Special Operating Agency. Steps have been taken to establish Information Technology Standards ensuring compatibility of the networks and portability of applications. GTA estimates a saving of $13 million to $15 million in 1991-92 (3.92 to 3.97).

3.4 Department of External Affairs - Consular Services - The Department is making headway in implementing the 1989 recommendations. For example, a major consular awareness program that addresses our concerns has been developed and launched. However, efforts initiated at headquarters to respond to our recommendation on the need for a better definition of the range and extent of consular services will have to be carried through at the missions. It is anticipated that all our recommendations will be fully implemented by 31 March 1992 (3.106 to 3.118).

3.5 Department of National Health and Welfare - Canada Assistance Plan - Monitoring and verification of provincial compliance with the CAP Act has improved, but information to Parliament in the Estimates and the annual reports is still not adequate (3.131 to 3.139).

3.6 Department of Transport - Canadian Coast Guard - Protecting Mariners' and Public's Interest - There has been progress in some areas, but much remains to be done to fully deal with our observations and recommendations to improve the safety of mariners and the public (3.161 to 3.167).

3.7 Department of Transport - Canadian Coast Guard - Fleet Management, Aids to Navigation and Icebreaking - The Coast Guard has done some analysis of its navigational aids fleet requirements and is downsizing as a result. We are concerned about the length of time it is taking to address our observations and recommendations regarding the icebreaking fleet and maintenance (3.168 to 3.177).

3.8 Canada Employment and Immigration Commission - The Unemployment Insurance Account - CEIC has taken several measures that satisfactorily respond to our observations and recommendations, and has recently developed and implemented other corrective measures, which will be the subject of a future audit or follow-up. The Commission has selected performance indicators for the Claimant Re-employment Strategy for 1991-92, but only after they have been implemented will we be able to assess actual progress in the re-employment of UI claimants (3.178 to 3.190).

Introduction

3.10 Follow-up generally is done two years after the original audit chapter appears in the annual Report. This year, however, follow-up work on two 1989 chapters was cancelled, and deferred on five others.

3.11 Follow-up on the 1989 Incentive Award Plan audit was cancelled because the issues were satisfactorily followed up in our 1990 Chapter - Efficiency in Government: A Special Study.

3.12 As noted in paragraphs 3.147 and 3.148, the follow-up on our 1989 audit of Customs and Excise has been cancelled because the subject of our audit, the federal sales tax, has been replaced by the goods and services tax.

3.13 A chapter on Emergency Preparedness is planned for the 1993 Report. Therefore, follow-up on the 1989 special audit of Emergency Preparedness Canada will be incorporated into that Report.

3.14 Our second follow-up on the 1987 audit of the Management Category has been deferred, given that Public Service 2000 recommendations and the most recent budget decisions affecting the Management Category are in the process of being implemented.

3.15 Follow-up on the 1989 audit of Elections Canada has been deferred until 1992, to allow the newly appointed Chief Electoral Officer time to determine an appropriate course of action and continue implementation activity on the recommendations.

3.16 The follow-up on the 1989 audit of the Federal Regulatory Review Process has been postponed until 1993 to allow time to address the recommendations and the results of discussions with the Standing Joint Committee for the Scrutiny of Regulations.

3.17 The issues raised during the 1989 special audit of Courier Services are now being addressed as part of a wider set of purchasing issues. Follow-up on this audit has therefore been deferred.

3.18 Follow-up on the 1988 and 1989 chapters on the Department of Supply and Services is reported in Chapter 18 - Department of Supply and Services - Management of the Government Procurement Service, and Chapter 19 - Department of Supply and Services - Government Procurement and Industrial Development.

Special Audit - Microcomputer Study - 1987, Chapter 15

Background

3.20 Five organizations were involved in the 1987 study:

• Department of Agriculture;
• Department of National Revenue - Customs and Excise;
• Department of Energy, Mines and Resources;
• Statistics Canada; and
• Department of Transport.

3.22 The 1991 follow-up examined the same organizations, plus the Department of the Environment. As in 1987, we consulted Treasury Board Secretariat and the Department of Supply and Services on policy and acquisition issues.

Conclusions

3.24 Departments need to optimize their investment in microcomputer technology by linking their acquisitions to their program needs, by supplying appropriate training, and by ensuring that their systems are compatible with established government and departmental standards, to support on-line interactive government systems and the portability of applications.

3.25 We acknowledge that it is difficult to complete a business-case analysis to assess the benefits of individual microcomputer acquisitions. However, considering the government's current and planned investments in office automation, departments need to acquire equipment and services as part of a planned strategy that includes doing appropriate business-case analyses. This is even more important now, in light of the current trend toward using micros as an integral part of a growing telecommunications environment. Where cost justification for individual micros is not practical, departments at least need to establish the quantitative or qualitative benefits of using them in organizational or functional units.

3.26 Equally important, post-implementation reviews are needed to determine whether projected benefits or improvements in service have been attained, and to provide input for refining future cost-benefit analyses. Departments therefore need to have short- and long-term information technology strategies to provide for the systematic implementation and future evaluation of microtechnology.

Observations

3.28 According to the Department of Supply and Services (DSS), the cost of a standard microcomputer workstation had dropped from $5,000 in 1987 to $2,500 by 1991. DSS also estimates that in fiscal year 1991-92 an additional $250 million will be spent, for a total of $870 million since 1987. Our 1987 study noted that the cost of making micros fully productive could be up to six times the initial purchase price; this is confirmed by recent research studies. This means that the government's total investment in microcomputer technology over the five-year period ending in March 1992 could amount to as much as $5 billion.

3.29 The departments in our study have made considerable progress in implementing our 1987 recommendations. Most have published an approved microcomputer policy dealing with the issues of software licensing and copyright protection. Departments have also established micro support units and are addressing the security implications of using micros. DSS has automated procedures for ordering and for regularly updating the Master Standing Offers for micros, to reduce acquisition prices and lead times.

3.30 In 1989 and 1990 Treasury Board published new policies on the Management of Information Technology and of Government Information Holdings. This year TBS has also endorsed a new five-year strategic direction for "Enhancing Services and Program Delivery through Information and Technology". Our 1987 study encouraged innovation in the use of microcomputer technology; the new TBS strategic direction will consider programs and mechanisms that would recognize and reward innovative uses of technology.

3.31 Measuring productivity improvements derived from the use of microcomputers is difficult, especially at any level above a support or clerical function. Our 1987 study observed that "even though the task is not easy, organizations need to assess overall costs and benefits that result from using microcomputers." Current government policy says that the "relatively low cost of office-support systems has been used to argue that such acquisitions should be free of controls of any kind. While that approach might be defensible on a small scale, experience has shown that this view ignores a number of important considerations." The 1990 Treasury Board policy and new strategic direction propose government-wide evaluation of major information technology projects, based on business-case criteria.

3.32 Only one department has evaluated its "office-support systems": in 1990 the Department of the Environment produced a report projecting significant benefits over a six-year period, mainly in increased personnel productivity, and reduced costs for telephone, travel, mail, etc.

3.33 All departments have made major investments in the use of microcomputers over the past five years, and most are becoming more involved in networking. Some have completed business-case proposals for acquiring and using microcomputer technology. Our 1987 study found that the government was realizing measurable benefits from the use of micro technology; however, many of the microcomputers acquired recently are being used by government employees other than secretarial or support staff. Government and industry do not yet have effective methods to measure productivity improvements resulting from the use of microcomputers by "knowledge workers".

Department of Energy, Mines and Resources - The Management of Federal-Provincial Contribution Programs - 1988, Chapter 10

Background

3.35 The 1988 audit reviewed three major federal-provincial contribution programs:

• the $200 million Canada-Nova Scotia Development Fund;
• the $225 million Canada-Newfoundland Offshore Development Fund;
• the $63 million federal contribution to most provinces through the Mineral Development Agreements. We focussed on the $44 million agreement with Quebec and the $4 million agreement with British Columbia.

3.37 Each program we reviewed showed evidence of weak accountability to Parliament. Some of the projects supported by the $200 million Canada-Nova Scotia Development Fund appeared to be appropriately related to the objectives of the Fund, but many others - a total of more than $100 million in project commitments - did not. In contrast, the projects supported by the $225 million Canada-Newfoundland Offshore Development Fund did appear related at the time of our 1988 audit; however, it was too early to tell if value for money would be achieved. Our main concern with the Mineral Development Agreements was that the government had not prepared adequate economic development plans on which to base them.

3.38 We recommended that the Treasury Board and program managers review the problem areas we highlighted in these programs and take steps toward improving accountability to Parliament.

Organizational Change

Conclusion

3.41 In the case of the Nova Scotia Development Fund we observed that the federal and provincial governments are discussing a possible modification, proposed by Nova Scotia, to the terms and conditions of the Fund.

3.42 We reviewed the projects approved since the 1988 audit under the Canada-Newfoundland Offshore Development Fund. These projects are related to the development of the Hibernia oil field and to other offshore-related initiatives, and are based on a formal provincial strategy for offshore development.

3.43 There now exists an improved process for planning and implementing the Mineral Development Agreements. Evaluations for the Agreements we examined in 1988 have been completed or are in progress.

Scope

Status of the Development Funds

Canada-Nova Scotia Development Fund

3.46 Since the 1988 audit, seven projects have been submitted to the federal Minister for approval. Four projects were approved and two were rejected on the grounds of lack of relationship to oil and gas activities in the offshore area. One project is presently under review.

Canada-Newfoundland Offshore Development Fund

3.48 Since the 1988 audit, six projects have been submitted for approval. Five were approved and one was rejected on the grounds that it was not related to offshore development.

Observations

Treasury Board

3.50 At a subsequent Public Accounts Committee meeting, the Comptroller General stated that there had been a misunderstanding between the Department of Energy, Mines and Resources and the Treasury Board when the terms and conditions governing the contribution arrangement with Nova Scotia were approved. This misunderstanding permitted the payment of money for salaries of regular provincial employees. In 1988 we expressed concerns about the eligibility of these payments. There is no intention, or mechanism in place, to recover this money; however, there is now a formal departmental process to review compliance with the terms and conditions prior to the approval of new projects by the federal Minister.

Changes to the Administration of the Development Funds

3.52 On 19 October 1989 the Minister informed the Standing Committee on Public Accounts that, to strengthen the project approval process for the Nova Scotia Development Fund, a federal Interdepartmental Advisory Committee would be established and all new proposals submitted would have to clearly indicate their relationship to offshore oil and gas activity.

3.53 Federal Interdepartmental Advisory Committees for both Funds were established on 19 February 1990 to review projects for their eligibility against the terms and conditions of the Funds. Although there is little documentation of formal project analysis for either Fund, we found evidence of improved documentation in project proposal submissions; requests by the Minister for additional information before approving projects; evidence of formal consultation with other federal departments; and, in the case of the Nova Scotia Development Fund, minutes of committee meetings.

Canada-Nova Scotia Development Fund

3.55 On 26 September 1990 the federal and provincial Ministers agreed, in accordance with Part VI of the Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act, to discuss an amendment to the Canada-Nova Scotia Development Fund Agreement. The federal and provincial Ministers designated representatives to develop a draft amendment for ministerial approval. We have been informed that the intent is to clarify the meaning of social and economic infrastructure costs. Since no agreement has been reached, we are unable to assess the impact on the future administration of the Fund.

Department of Finance - Management of the Borrowing Program - 1988, Chapter 11

Background

Scope

Conclusion

Observations

Program Evaluation

3.60 In the section of the Department responsible for the borrowing program, alternative strategic approaches to meeting the government's financial requirements are analyzed and proposed to the government, and quarterly reports are made that assess the program's performance in relation to the approved annual borrowing program. As well, analysis on a transaction-by-transaction basis is undertaken.

3.61 In 1990, in response to our recommendation, the Department developed an independent committee to objectively evaluate the borrowing program; however, the committee never met. The Department of Finance maintains that it is still reviewing how it might comply with policies respecting program evaluation of the Public Debt Program.

3.62 This is the largest expenditure program of the government, since interest on the public debt is charged to it. It is also a huge financial operation involving several hundred billion dollars of transactions for new borrowing and for the retirement and refinancing of maturing debt. It is a highly technical operation affected by market forces and subject to public policies, such as monetary policy and exchange fund operations, over which the section responsible for the borrowing program has no direct control.

3.63 No improvements have been made respecting evaluation of this important program within the framework required by the Treasury Board policy.

Reporting to Parliament

Department of Fisheries and Oceans - Atlantic Operations, Inspection and Corporate Functions - 1988, Chapter 13

Background

3.66 The 1988 audit report made 10 recommendations. In addition, DFO management made specific commitments toward correcting weaknesses it had recognized.

Scope

Conclusion

3.69 Management has acted to address the deficiencies in the Fish Inspection Program but progress in general has not been as fast as anticipated. However, progress has been faster than expected in developing the Quality Management Program, which makes it possible to place increased reliance on in-plant quality control.

Observations

Resource Management

3.71 Improving economic analysis. In 1988 we noted that the Department did not have a consistent process for developing the economic advice needed for long-term resource management strategies. Since 1988, the Department has conducted a number of studies of fleet viability and capacity. It has also formed a national committee of economic managers to co-ordinate economic activities. We believe these actions will contribute to a formalized, long-term approach to economic analysis.

3.72 Challenge and review procedures for economic advice. To ensure that economic advice meets necessary standards of consistency and credibility, we recommended that the Department institute challenge and review procedures. Since that time, a process for internal and external reviews of major economic analyses has been implemented. Since 1988, there has been considerable improvement; however, some reviews still are not formally documented and some studies are excluded from the full process.

3.73 Issuing new licences. In 1988 we noted that the Department was using varying methods to grant new licences. Around that time, the Minister's Atlantic Regional Council made recommendations that addressed these inconsistencies. DFO has incorporated the Council's recommendations in its most recent Commercial Fisheries Licensing Policy for Eastern Canada.

3.74 Control of replacement vessel capacity. In 1988 we noted that the Department vigorously enforced controls over the length but not the hold capacity of replacement fishing vessels. The Department lacked adequate information on the hold capacity of replacement vessels before they were built. When they were presented for licensing after completion, vessels whose hold capacity exceeded the limits of the vessel replacement rules were sometimes granted licences.

3.75 Since 1988, the Department has implemented new procedures requiring that owners provide information on capacity before building a replacement vessel. The now mandatory Application for Fishing Vessel Replacement requires information on the vessel's cubic capacity based on measurements certified by a marine surveyor. These actions have satisfactorily addressed our concerns.

3.76 Improving the timeliness of regulatory amendments. In 1988 we noted that delays in promulgating regulations had created problems in implementing previously announced policies or fishing plans. At the time of our audit it took nine months for a new or amended regulation received at national headquarters to get final approval. We recommended that the Department consider seeking an exemption from certain pre-publication requirements where extensive consultation routinely took place. The Department reviewed the issue and made such a request, but it was refused. A departmental internal audit subsequently made 21 recommendations to improve the regulatory amendment process. As part of our follow-up we reviewed 18 regulatory amendments completed in 1990; we found no significant change in the time required to promulgate regulations.

3.77 Acquiring major equipment needed for enforcement initiatives. In 1988 we reviewed the implementation of major enforcement initiatives. We noted that the Department had not had complete cost information about the armed boarding initiative, that costs had escalated and that the project's implementation had been delayed. In reviewing the acquisition of a surveillance helicopter, we were concerned that the Department had not adequately assessed the number of days when conditions would permit its use, and had not gathered appropriate data to evaluate its usefulness. We also noted deficiencies in communications equipment, which the Department was planning to correct.

3.78 During our follow-up we found that steps had been taken to identify the continuing costs of the armed boarding initiative. The anticipated annual costs for the initiative have remained relatively constant since 1988.

3.79 As a result of its limited use of the surveillance helicopter from offshore patrol vessels, the Department decided not to renew the lease. However, it has signed a three-year lease for a larger land-based helicopter. We reviewed the process for acquiring the latter to determine whether our concerns had been addressed. Although the documentation supporting the stated requirements was weak, we found that this helicopter appears to be meeting DFO's requirements.

3.80 The Department continues to make progress in improving its communications capability. However, implementation does not appear to be as quick as was anticipated, because of the technical complexities of this project.

3.81 Improving operational productivity. In order to improve the operational effectiveness of inshore patrol vessels, we recommended that DFO extend the practice of requiring that crews add the duties of fishery officers to their other duties. Since 1988, DFO has designated all ships' masters and deck officers and most crew members as fishery officers. The Department has obtained legal advice that these individuals can act as fishery officers on land or sea.

3.82 Improving controls over the vessel acquisition process. In 1988 we reviewed the Department's procedures for acquiring two types of small patrol boats. After noting problems with both classes we recommended that the Department improve its procedures for controlling design changes, and for ensuring that boats are designed and built to meet the needs of users.

3.83 Since 1988, the Department has improved the training of project managers, formalized the process of approving design changes and is developing a project management manual. To follow up, we reviewed procedures used to acquire additional 42-foot vessels. We noted that there was extensive consultation among users, project managers, the builder and regional staff. Formal sea trials were held for these vessels. These actions represent significant progress in addressing our recommendation.

The Fish Inspection Program

3.85 Manuals. At the time of our audit the Department had begun revising its national manuals on inspection procedures, with a goal of issuing four new manuals in 1988 and completing two of those four in 1989. During our follow-up, we noted that many sections of the manuals were still in draft form; however, key sections dealing with health hazards and ensuring uniformity of inspection had been issued.

3.86 Field reviews. The Department intended to begin a program of systematic field reviews in 1989-90. There have been subsequent field reviews of compliance with specific policies and procedures, conducted under the direction of national headquarters. However, there has been no overall assessment of field compliance with national policies and procedures. Incomplete inspection manuals and the absence of a national plan for field review have limited the Department's progress in addressing this deficiency.

3.87 Sampling. In 1988 the Department began a review of its sampling methods to determine whether it could achieve the necessary degree of assurance using fewer samples. The Department has completed the study but has not modified its sampling plan while it continues to examine approaches to sampling.

3.88 In-plant quality control. In 1988 we noted that the Department was not relying on processors' in-plant quality control to assure that standards were met. This area has received a great deal of attention through the Quality Management Program, which requires processors to submit their quality control procedures to the Department for approval. DFO is now shifting emphasis from inspection of final product to monitoring compliance with approved quality management programs.

3.89 Cost recovery. In 1988 we noted opportunities to increase cost recovery in the Inspection Program. New measures were to be initiated by 1991. Responding to the Treasury Board User Fee Policy, DFO formed a task force to study opportunities for increased cost recovery in September 1990. This review was to include the Inspection Program. However, except for raising import inspection fees, the Department had introduced no additional inspection cost recovery measures at the time of our follow-up.

3.90 Ensuring consistent application of standards. In 1988 we noted inconsistencies in the standards applied by inspectors. We also observed that there was no systematic testing of inspectors' sensory evaluation skills. Since 1988, DFO has introduced policies and standards to improve consistency. The Inspection Program has also held a number of national workshops for assessing and ensuring uniformity in sensory inspection decisions.

The Fishing Vessel Insurance Program

Efficiency - The Management and Use of Telecommunications in the Federal Government - 1989, Chapter 7

Background

• the Treasury Board ensure that an administrative infrastructure exist and that it support a co-ordinating body, such as a common service agency, to obtain or provide all telecommunications services for the federal government. We recommended that the co-ordinating body be held accountable for achieving the savings in telecommunications services; and
• GTA's role as a common service agency be reviewed and its mandate clarified, and the provision of common services for telecommunications be re-examined, with a view to studying the role of a common service agency as re-seller of carrier service and negotiator of agreements similar to "master standing offers" for services.

Conclusion

3.94 The Government Telecommunications Agency has been designated as a Special Operating Agency, providing it with a framework for greater entrepreneurial effort. GTA remains designated as a Common Service Organization for telecommunications services. This policy continues to classify the type of service GTA provides as optional to client departments and agencies.

3.95 The confidence of user departments in GTA's data network management has increased since our 1989 audit. GTA has the support and confidence of various interdepartmental committees dealing with telecommunications and information services in government. While there is some concern as to the ability of GTA's limited technical human resources to meet these expanded requirements, the Agency has now implemented an industrial exchange program with the private sector to augment its technical expertise.

3.96 GTA in its new role as a Special Operating Agency has taken steps to improve efficiency of government data and voice communications. More departments are taking advantage of GTA's new data communications bulk purchases.

3.97 The Government Telecommunications Agency and key users indicate that these actions are beginning to provide savings to government while expanding the services to meet new needs. GTA estimates it will save $13 million to $15 million in 1991-92. However, it is not possible during this transitional phase to accurately quantify savings to date, due in part to the lack of a precise government-wide inventory of government data services.

Department of the Environment Canadian Parks Service - 1989, Chapter 11

Background

Conclusion

3.100 CPS has developed a strategic plan, which was used to review 1991-92 operational plans and is now being used to determine future program priorities.

3.101 The 1990 biennial "State of the Parks Report" is an important achievement, providing detailed information on the current state of parks and historic sites, the risks to which each is exposed, and what still needs to be done to complete the system.

3.102 However, progress has been slow in some areas. Two of the more important of these areas are the preparation of Resource Management Plans and the provision to Parliament of results-oriented information.

Observations

Resource Management Plans

Information to Parliament

3.105 We will continue to monitor the Department's progress in addressing the remaining outstanding issues.

Department of External Affairs Consular Services - 1989, Chapter 12

Background

Conclusion

3.108 Efforts initiated at headquarters to respond to our recommendations will have to be carried through at the missions. In particular, the range and extent of consular services must be defined in terms precise enough to ensure that treatment of Canadians is consistent and is perceived as fair, and to also ensure the most effective use of resources at each post. In our opinion, if the current momentum is maintained the Department should be able to meet its implementation target.

Areas of Substantial Progress

Areas of Reasonable Progress

3.111 Need to define duties and responsibilities of honorary consuls. Since our 1989 Report, the Department's headquarters has made progress in defining the duties of honorary consuls, by clarifying its instructions in manuals and by asking heads of missions to annually specify honorary consuls' responsibilities to them. Headquarters is now better monitoring monthly and annual information related to honorary consuls.

3.112 Contingency plans. In 1989 we reported that contingency plans for missions either did not exist or were not updated annually, as required by departmental policy. Without delay the Department then instructed all missions considered to be facing risk situations to immediately complete and update their contingency plans. It also instituted a revised procedure to ensure that contingency plans are sent to Ottawa by 31 December of each year.

3.113 In our follow-up, we reviewed the current status of contingency planning in the Department. Progress has been made toward ensuring that all 53 missions listed by the Department as being at risk have a contingency plan. However, the contingency plans have not been annually updated as required by departmental policy: 27 have not been reviewed for at least a year, and 5 of these were more than two years old.

3.114 The Department has indicated that it intends to institute its annual review and update procedure next year. We were informed that the 1990 update was not pursued actively by headquarters due to the additional workload associated with the Gulf Crisis.

Areas Where Progress Has Been Slower

3.116 Passports. Our 1989 audit disclosed that a number of gaps existed in control procedures for the issuance of passports at missions abroad.

3.117 At the time of our follow-up, the Department had taken steps in certain areas to reduce the risk of issuing passports to ineligible persons. However, it had yet to fully assess the overall risk associated with the gaps we had identified.

3.118 The Department has informed us that it intends to conduct a thorough study of passport controls in the 1991-92 fiscal year.

Department of Finance - The Management of Foreign Exchange Operations - 1989, Chapter 13

Background

Scope

Conclusion

Observations

Enhancement of Earnings

3.123 A paper on the required size of the reserves, and investment guidelines for fund managers, are being finalized and are expected to be implemented soon.

Accounting and Performance Information

Information to Parliament

Department of Finance Tax Collection Agreements - 1989, Chapter 14

Background

Conclusion

3.128 In regard to the imposition of flat-rate taxes by three provinces, the present arrangements have been extended until the end of 1991. The Minister has agreed to undertake consultations with the provinces and other interested parties, to examine the desirability of allowing provinces greater flexibility in defining their personal income taxes within the tax collection agreements. The Department published a discussion paper entitled "Personal Income Tax Co-ordination - The Federal Provincial Tax Collection Agreements" in June 1991, which, among other things, deals with flat-rate taxes. The Minister has also announced the formation of an advisory committee to review the technical aspects of the discussion paper. The outcome of this process may rectify the present contravention of the tax collection agreements.

3.129 The Department, in conjunction with the Office of the Comptroller General, is taking steps to improve some of the procedures for estimating the liability to the provinces for their share of tax collections in the Provincial Tax Collection Agreements Account. Some results of this effort may be reflected in the 1990-91 Public Accounts; further work is in progress. However, there is still more work to be done.

3.130 In response to our recommendation for improved accountability and reporting to Parliament, the Department has provided some additional information on the nature and objectives of the agreements in its Part III Estimates for 1991-92. It has not, however, provided any information on the results achieved in administering the agreements. The Department has advised us that it is looking into the matter with a view to providing some relevant additional information.

Department of National Health and Welfare - Canada Assistance Plan - 1989, Chapter 15

Background

Conclusion

Observations

Compliance With the CAP Act

Monitoring and Verification of Compliance

3.135 Since then, management has produced three new planning documents: a business plan, an annual work plan and detailed audit plans. Although a recently developed training course for CAP managers addresses the subject of reliance, the planning documents we reviewed in our follow-up do not. We understand, however, that staff and contract auditors are now documenting the audit areas reviewed and what reliance, if any, is warranted.

3.136 We also recommended in 1989 that the nature, extent and timing of planned and actual review work at the federal level be documented. The documentation of verification at this level has improved. CAP management informed us that variations from planned review activities are now analyzed and the results used when planning future reviews.

Information and Reporting

3.138 Our follow-up found that changes in the Estimates document over the last two years have been minimal. We still believe that the Estimates Part III represents a valuable opportunity to improve the reporting of Canada Assistance Plan information. For example, it could include key findings of CAP program evaluations.

3.139 The purpose of the annual report is to provide good and timely information; the Department is still falling far short of that objective. In June 1991 Parliament received one report covering the three years 1986-87 through 1988-89. The annual reports for 1989-90 and 1990-91 remain outstanding.

Quality Assurance - 1989, Chapter 16

Background

3.141 This year the Office audited the DSS procurement function, which includes quality assurance as an integral component. Follow-up on our 1989 recommendations related to DSS, therefore, was included as part of that audit, reported in Chapter 18.

Conclusions

3.143 We reviewed the specifications for airport emergency rescue vehicles and found that they now incorporate quality assurance requirements. For the Canadian Coast Guard most fleet system standards are still under development. CCG intends to include quality assurance requirements in system standards as it has for the welding of aluminum. However, these requirements had not yet been incorporated in the draft standards for two ship component systems that we selected for review. CCG also developed, for an acquisition project, procedures for initiating, tracking and monitoring design changes, a major concern in our 1989 audit. We were informed that this will form the basis of a formal quality assurance process for all CCG projects in the future.

3.144 Canadian International Development Agency (CIDA). In 1989 we recommended that CIDA assign the functional responsibility for quality assurance to a senior executive charged with developing and implementing agency-wide quality assurance policies and procedures, to cover all CIDA-funded contracts. CIDA agreed in principle and stated that the implementation of our recommendations could be more adequately considered subsequent to the establishment of an overall government policy on quality assurance.

3.145 On 1 January 1991 the Vice-President, Professional Services Branch was assigned responsibility for quality assurance in CIDA for all goods and equipment, with the sole exception of quality assurance for bulk commodities, which remained with the Director General, Operations Services Branch.

3.146 CIDA has not yet developed agency-wide quality assurance policy and procedures as we recommended in 1989. However, the Professional Services Branch began to develop and implement a five-part work plan in June 1991, which should lead to such a policy and procedures.

Department of National Revenue Customs & Excise - Excise - 1989, Chapter 18

3.148 The GST legislation came into effect on 1 January 1991. As the FST administration is being totally phased out, we have decided that it is not cost-effective to conduct a follow-up on our 1989 recommendations. Instead, we will be examining various aspects of the GST administration in future audits of the Department.

Department of National Revenue Taxation - 1989, Chapter 19

Background

Conclusion

Observations

Cash Receipts

3.152 The Department has put in place procedures for handling cash at district offices and taxation centres in the event of an equipment or system shutdown. Also, it has recently increased the number of data files regularly backed up for off-site storage. It has carried out and will continue to carry out tests to recreate selected files from data stored off site. The Department considers that this approach demonstrates its capability for recovery of immediately required data and, over time, will demonstrate the recoverability of the larger programs and files.

Canada Pension Plan

3.154 A memorandum of understanding between the two Departments was finalized in July 1991, subject to consideration by the Treasury Board of its financial implications.

3.155 Our 1989 chapter also reviewed the history of growth in the unidentified earnings file, as reported in the Auditor General's annual Reports since 1985. We noted at the time of our follow-up that the file continues to grow and now numbers 4.8 million items, for a total of $159 million. The Department has taken some initiatives aimed at slowing the growth of the file.

Taxation Centre Productivity

3.157 The Department has since undertaken two studies, one focussing on the Ottawa Taxation Centre and another looking at performance standards in all taxation centres. The first study revealed opportunities for savings of 10 person-years. The research for the latter study is complete but the report on its findings has not yet been finalized.

Statistics Canada - 1989, Chapter 20

Background

3.159 Our follow-up findings are based on a review of the agency's report on its action in response to our recommendations, and an examination of its supporting documentary evidence. We also conducted interviews with officials of the agency.

Conclusion

Department of Transport Canadian Coast Guard - Protecting Mariners' and Public's Interest - 1989, Chapter 22

Conclusion

Marine Emergencies

3.163 Spills of hazardous materials. We observed in 1989 that the CCG had not developed the capability to deal with spills involving hazardous materials, other than petroleum products. The CCG has stated that part of the problem lies in the fact that dangerous products, such as toxic chemicals, may dissolve if spilled; the technology still does not exist to address this. The CCG states that it actively consults with industry; however, it has not yet formally assessed the industry response capability on which it would rely. A joint pilot project, with the Department of the Environment, is being implemented in the Maritimes Region. The Canadian Coast Guard indicates that equipment acquisition and personnel training now enable it to respond to specific, limited types of incidents with an initial assessment capability, including on-scene survey for initial assessment and limited emergency stabilization. This capability, to be extended to other regions in 1992, does not include post-spill clean-up, which the CCG states is the responsibility of the shipper or the shipper's contractor as required by the Transportation of Dangerous Goods Act.

Ship Safety

3.165 Foreign vessel inspections. The Canadian Coast Guard did not have an overall plan for meeting the goal of the European Port State Control Agreement to inspect 25 percent of foreign vessels. Except for foreign oil tankers, none of the CCG's regional offices had goals for the rate of inspection of foreign vessels. The CCG has now doubled its inspection rate from 8 percent in 1989 to 15 percent in 1990. However, regional inspection targets have not been established.

3.166 Passenger ferry operations. In 1989 there was no formal program, such as random checking, to inspect operating practices on passenger ferries. The CCG relied primarily on others to ensure that safe operating practices were followed, and had done only limited verification to find out whether this reliance was justified. The Canadian Coast Guard states that it intends to ensure that owners and operators of these ferries have established a system describing their policy, organization and procedures for monitoring and enforcing safe operating practices on their ships.

3.167 Risk assessment. We first noted in 1983, and again recommended in 1989, that the CCG assess current risks to the safety of ships. The CCG had not carried out a comprehensive analysis to determine the best way of promoting safety in marine transportation. We found that the CCG allocated resources based on historical patterns for mandatory inspections rather than on analysis of current needs. While the CCG has developed a risk assessment framework, it has yet to develop national and regional risk management plans and allocate resources according to risk. The Canadian Coast Guard states that the majority of its ship safety resources are required to enforce international conventions and national legislation, and that a study of safety activities will contribute to the assignment of discretionary resources relative to risk.

Department of Transport Canadian Coast Guard - Fleet Management, Aids to Navigation and Icebreaking - 1989, Chapter 23

Conclusion

Fleet Management and Icebreaking

3.170 Icebreaking fleet. In 1989 we found that only 13 out of 28 ice-capable vessels in the regions examined made a substantial contribution to the icebreaking program. We concluded that the Canadian Coast Guard did not know the extent to which its existing fleet met or exceeded program requirements. We noted that, while efforts were under way in 1989 to analyze the need to provide icebreaker escort services - either for economic benefits or to meet other government objectives - levels of service had not been defined. We also observed that the CCG followed an historical pattern of sending all available heavy icebreakers to the Arctic every summer, and did not have an analysis of whether the number of vessels deployed could be reduced with better scheduling. The CCG issued icebreaking levels of service in October 1990, and states that these will be adjusted over the next couple of years based on operational results. Progress has been made, but the definition of the need for icebreakers has yet to be fully developed and applied to icebreaking operations.

3.171 We noted in 1989 that, by paying cash in lieu of compensatory leave, and keeping crews on board at full pay, the Canadian Coast Guard was not managing overtime in a way that was consistent with the seasonal work patterns of its large icebreakers. We also reported that the CCG had completed an internal study, which observed that crewing levels for large icebreakers were in excess of those recommended in the study. Our review of 1990-91 overtime costs revealed that heavy icebreakers are still incurring substantial overtime costs, and crewing levels remain in excess of the study's levels. The Canadian Coast Guard states that crewing levels have been reduced, effective April 1991, by the application of a standard crewing formula for all operational postures.

3.172 Maintenance. We observed in 1989 that the percentage of time spent in maintenance varied widely by region, with the highest maintenance time in the region of the lowest utilization, and vice versa. The Canadian Coast Guard has not yet developed maintenance standards and, as a result, cannot monitor variances from such standards for better control over maintenance costs. The Canadian Coast Guard states that preventative maintenance profiles for vessels are being developed; analysis and reporting of variances between actual maintenance and profile should be in place at the end of the current fiscal year.

Aids to Navigation

3.174 Contracting out. In 1989 there was no overall CCG policy on when and how contractors should be used, and no cost-benefit analysis had been done to determine the best mix between the Canadian Coast Guard and the private sector. There was a wide variation among the regions in the use of contractors. In May 1991 the CCG issued formal policy guidelines for contracting out.

3.175 Solarized batteries. We also noted in 1989 that the CCG had been slow in solarizing batteries on floating buoys, a practice that could increase battery life from one year to as long as eight years. The Canadian Coast Guard states that it has installed 85 solar-powered batteries on buoys to date. It has also informed us that a problem with reliable batteries has been resolved and that all 600 year-round buoys will be solarized by March 1993. The CCG also plans to start solarization of seasonal buoys by 1994-95.

3.176 Maintenance. We found in 1989 that the CCG was not ensuring that its buoys were checked with the frequency it recommended. We also noted a lack of uniformity in the painting of steel buoys. Few standard maintenance practices had been developed and there was no consistency among regions in the timing of and procedures for equipment inspection. The Canadian Coast Guard states that the buoy checking standard has been changed; seasonal buoys will not be checked and year-round buoys will be checked only annually. The CCG also has begun to apply high-performance paint to buoys in conjunction with the solarization project. For other short-range navaids, the CCG formed a technical committee of headquarters and regional staff in April 1991, to develop the necessary standards. The CCG has made progress in reducing its maintenance requirements for buoys, but is slow in developing maintenance standards for other equipment.

3.177 Information Systems. We reported in 1989 that the Canadian Coast Guard had been working on an aids information system since 1983, but the system was not fully operational. Our follow-up found that the system is still not operational, but the CCG plans to complete installation in three regions by October 1991.

Canada Employment and Immigration Commission and Unemployment Insurance Account - 1988, Chapter 18 and 1989, Chapter 24

Background

Conclusion

3.180 The variable unit cost of processing unemployment insurance claims has decreased in constant dollars from $34 to $30 since 1988, while productivity has continued to improve. According to the indicators used by the Commission, the quality and speed of UI claims processing have not been affected. The Commission continues to monitor the operating practices of Canada Employment Centres and encourages them to look for the most economical and efficient work methods.

3.181 The Commission has recently developed and implemented other corrective measures, which will be the subject of a future audit or follow-up. In 1992 the Commission will participate in a new government initiative for recovering overpayments from income tax refunds due to claimants. It has also developed action plans setting out guidelines to promote the development and enhancement of the Labour Market Information function and to measure and report on the effectiveness of the Unemployment Insurance activity over a five-year period.

Observations

Employment Services

Links between Employment and Unemployment Insurance Services

3.184 One major development is the Claimant Re-employment Strategy. During 1990-91, the Commission began the progressive implementation of the strategy in more than 350 Canada Employment Centres, thereby encouraging closer links between Employment and Unemployment Insurance Services.

3.185 The Commission has selected performance indicators for the Claimant Re-employment Strategy for 1991-92, but only after they have been implemented will we be able to assess actual progress in the re-employment of UI claimants. Given the current economic situation and the implementation of many other aspects of the strategy, monitoring of claimants' efforts to find employment is still in the process of being implemented.

3.186 At the time of the follow-up, the Commission was completing the selection and development of relevant indicators, originally planned for 1988, to measure the speed and quality of service as well as the productivity and efficiency of resources assigned to National Employment Services. However, testing of new indicators is not planned until 1992-93.

3.187 The results of initiatives and evaluation reports on the quality of counselling indicate that the Commission could measure the performance of these services. However, we found that the Commission still has no data on the effectiveness of its Counselling services, whether internal or external, for individual or group counselling. Effectiveness measures for these services are not planned until 1992-93. Moreover, the Commission has not assessed the cost-effectiveness of alternatives to individual counselling and ensured that Canada Employment Centres offer such alternatives where warranted.

Unemployment Insurance Services

3.189 At the request of the Canadian Payroll Association, the Commission has deferred implementation of a new computerized Record of Employment indefinitely. Nonetheless, the Commission should continue to assess the costs and benefits of other ways to improve or simplify the Record of Employment system, including ways that would require amendments to the Unemployment Insurance Act.

Overhead Costs