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1998 September Report of the Auditor General of Canada

Main Points

18.2 FIS began a decade ago. Progress in the early years was slow, but in recent years the tempo of work has picked up. To date, FIS has focussed on implementing new departmental financial systems that are Year 2000-compliant and on ensuring that departmental and central systems will provide appropriate information to include in the government's annual financial statements.

18.3 However, the government has yet to implement its plans to deal with the important area of making full accrual financial information available to officials within departments and agencies who manage business lines and related components on a day-to-day basis. One of the objectives of FIS is to provide officials with more complete information on costs to compare with results achieved when making key decisions. Until this is done, the full benefits of FIS will not be realized.

18.4 While better cost information for decision making is a benefit of FIS, we note that neither individual departments nor the government overall are aware of the full costs of FIS implementation, which could be significant.

18.5 The government and Parliament can help ensure the success of FIS by appropriating funds on a full accrual basis, so that accountability and reporting are on the same basis. But central agencies and individual departments must also act to help ensure that the full benefits of FIS are achieved. Central agencies must secure complete departmental "buy-in", and deputy ministers of individual departments must put in place the necessary infrastructure, including appropriate systems and human resources.

18.6 Departments face a major challenge in completing the renewal of their financial systems to meet the objectives of FIS. Best practices and lessons learned from others who have gone before can help achieve success.

18.7 Given the massive scale of financial systems renewal now under way to meet the Year 2000 challenge, we believe that there is a unique opportunity to put FIS in place by the 2001 target implementation date. This is not a simple task. To obtain the full benefits of FIS and thus have in place the information required for government today, the challenges faced by the government and summarized in this chapter must be met. In future audits, we will continue to track the government's progress in implementing FIS and achieving these benefits.

Introduction

Getting government right

18.9 In 1995, the President of the Treasury Board announced a new Expenditure Management System (EMS) to ensure that the scrutiny of government spending initiated under Program Review became a permanent feature of public sector management. To operate in this new environment, government managers and parliamentarians alike need reliable information to help them assess and scrutinize the efficiency and cost effectiveness of ongoing activities. To help meet this need, the Minister of Finance announced in his 1995 Budget, "the government intends to adopt 'full accrual accounting', which is comparable to private sector practice." He further noted, "This change will better enable the government to report the true cost of programs and improve accountability."

18.10 The government's Financial Information Strategy (FIS) is one of the key vehicles being used to put these changes in place. The 1997 report of the President of the Treasury Board, entitled Getting Government Right, stated that FIS "is intended to lead to a model for financial management and accounting comparable to the private sector." The government's current vision, mission and tactics for the implementation of FIS are described in Exhibit 18.1 . In our view, some significant implications of FIS involve the move to full accrual accounting practices similar to those used by business firms, the implementation of new financial systems throughout government and the integration of full accrual financial information into day-to-day decision making of departmental managers. The Appendix to this chapter provides more information on the historical background leading to FIS.

18.11 FIS was formally approved nearly a decade ago, was revitalized in 1995 and now has a target implementation date of 2001. As Exhibit 18.2 illustrates, the quality of financial information within the federal government, for both management and accountability, continues to be significantly below acceptable standards in the private sector. Getting government right in the years ahead will require that this disparity be eliminated.

18.12 In his 1997 annual report entitled Accounting for Results, the President of the Treasury Board noted that in order to demonstrate accountability to taxpayers, "the government needs the capacity to measure activities (outputs) and results ... and to link these both to results commitments and to the resources used. " (emphasis added) Furthermore, he noted in his report that FIS "aims to enhance government decision making and accountability and to improve organizational performance by providing more complete information on the costs of programs and activities ." (emphasis added)

18.13 These statements highlight the importance and high expectations being placed by the government on FIS. We agree with the government that FIS is an important initiative in getting government right. This chapter is the first in a series of chapters on FIS over the next few years that aim to provide Parliament with an independent reporting on its development and implementation.

A 35-year call for improved financial information

FIS is a key component of the government's overall vision of comptrollership

18.16 This view of comptrollership embraces our definition of financial management in a government context, as described in Chapter 2 of our 1997 Report. Exhibit 18.4 is a graphical representation of the relationship of FIS to this vision of comptrollership. Successful completion of FIS is required as a pre-condition to being able to deliver on some of the main elements of modern comptrollership, including public accountability reporting, integrated financial and non-financial performance information for decision making, responsive and appropriate control systems and a mature risk management environment.

FIS implementation is a shared responsibility

18.18 At the centre, the Treasury Board Secretariat has established a FIS Project Office to provide leadership across government by managing and co-ordinating the development and implementation of FIS in departments and central agencies.

18.19 The Receiver General is responsible for the development and implementation of a modernized suite of central systems, including the replacement of the current Central Accounting System, that will support the new departmental financial systems, and will accept the summary-level financial data from departments. These data would then be used to produce the monthly Fiscal Monitor, the annual summary financial statements of the Government of Canada and other government-wide information.

18.20 Departments are responsible for implementing new financial systems within their organizations in a manner that supports the objectives of FIS. Departments are also responsible for the quality of the information that they generate to support their departmental decision making process and that they provide to the centre for preparation of the government's summary financial statements.

Strategic Challenges in Realizing the Full Benefits of FIS

Integration of FIS into departmental management

18.22 In his 1997 report entitled Accounting for Results, the President of the Treasury Board re-emphasized this call for improved financial information for management decision making by noting:

In general, however, existing sources of information do not answer questions about the costs associated with specific results. Although conclusive information linking costs and results is often difficult to obtain, improvements are being made through the government's Financial Information Strategy. The Strategy aims to enhance government decision making and accountability and to improve organizational performance by providing more complete information on the costs of programs and activities . (emphasis added)

18.24 To achieve the broad vision of FIS, the government recognizes the need to enhance an additional area - the use within individual departments and agencies of financial information on the cost of business lines and related components for comparison with results achieved. The new financial systems need to be implemented with an emphasis on providing this improved information for management decision making, both directly and through the integration of these systems with specialized costing systems. If this is not done as part of the initial system design, then additional investment may be required to modify these new systems beyond their current financial accounting focus to ensure that the objectives of FIS are fully met.

18.25 In our future audits, we will assess the progress being made within specific departments in implementing financial systems capable of capturing all relevant costs for key management decision making and in integrating these systems with specialized costing systems capable of analyzing the data captured.

18.26 What needs to be done to ensure that these new departmental systems are implemented in a way that finally answers the call for improved financial information for management decision making? We believe that a major part of the answer lies in the need to establish appropriate incentives for change, by moving to accrual-based appropriations and by obtaining departmental "buy-in".

Moving to accrual-based appropriations

18.28 Parliament controls the public purse through the granting of supply - setting limits on the amount of money available to managers to acquire resources. It does this by approving the Appropriation Act, which identifies, by spending authority (vote), the amount of money available to the government. As a result, departmental planning, managing and reporting are primarily concerned with spending money to acquire resources. But governments do not exist to acquire resources; they exist to deliver programs and services and, in doing so, they consume or use resources. For example, a government may acquire a building in a particular year to help deliver a program over many years. In doing so, a portion of the building's cost is consumed each year.

18.29 Accordingly, a far better basis to plan, manage and report departmental operations is to focus on the cost of resources consumed , which requires full accrual accounting as envisioned by FIS. Exhibit 18.5 provides an example of the impact of full accrual accounting on departmental managers. As stated earlier, in 1995 the Minister of Finance announced the government's intention to adopt full accrual accounting for the preparation of the annual Budget and for reporting back to Parliament on financial results in the Public Accounts of Canada. In addition, the government has informed us that it intends to ask departments to prepare their Reports on Plans and Priorities and their departmental Performance Reports on a full accrual accounting basis. These annual documents provide financial and non-financial information on departmental plans and priorities for the upcoming year and on performance against these plans after the end of that year.

18.30 While four important accountability documents referred to above - the Budget, the Public Accounts, Reports on Plans and Priorities and departmental Performance Reports - are all moving to a full accrual basis, the government has not announced any plans to ask Parliament to appropriate resources on this same basis. This leaves out the fifth important accountability document - the Main Estimates and the associated appropriations. In our view, the likelihood of encouraging departmental planning, managing and reporting to focus on resources consumed to achieve results will significantly increase if supply moves to a full accrual basis and ministers, deputy ministers and government managers are held to account on this new basis. As can be seen in Exhibit 18.6 , appropriating funds on a full accrual basis is currently the missing link in the government's plans to move to full accrual accounting.

18.31 The benefits of a full accrual basis of accountability were stressed as far back as 1962. The Glassco Commission believed that moving in this direction would provide:

• greater cost consciousness leading to better use of resources;
• improved decision making leading to better allocation of resources; and
• better evaluation of performance leading to better accountability.

18.33 Accrual-based supply would also benefit Parliament's oversight responsibilities by providing parliamentarians with consistently prepared information that facilitates linking plans and supply with results achieved. Aligning the supply process with the same basis of accounting the government will use for planning, managing and reporting would facilitate oversight by Parliament.

18.34 Treasury Board Secretariat officials have informed us that they are reviewing for Parliament's consideration various options for modifying the supply process. To help achieve the full benefits of FIS, we believe that the Secretariat, in conducting this review, needs to give serious consideration to focussing the supply process on the cost of consuming resources (full accrual basis) instead of on the cost of acquiring resources.

18.35 To help ensure that parliamentary control and authority are preserved in moving to full accrual appropriations, we believe the following basic principles are important to consider:

• clear purpose for each vote;
• dollar limits on the cost of resources that may be consumed;
• annual parliamentary scrutiny of appropriations;
• legislative support for full accrual appropriations;
• appropriation authority on the same full accrual basis as departmental planning, managing and reporting;
• government-wide treasury (cash) management oversight; and
• appropriations that distinguish between authorizing operational expenses (full accrual including depreciation) and authorizing capital investments (acquisition of capital assets).

Obtaining departmental "buy-in"

18.37 Deputy minister "buy-in" to full implementation of FIS is crucial. In this respect, the Secretariat's FIS Training Framework reported that meetings with departmental managers in 1997-98 "suggest that departmental commitment to FIS actions is not complete...." This concerns us greatly and will be reviewed in future audits.

18.38 Central agencies have an important role to play in ensuring deputy minister commitment to the vision and mission of FIS. Rewards, recognition and, if necessary, sanctions may be needed. The Privy Council Office is responsible for the strategic management of senior personnel in support of the federal government's management agenda. As a result, it has a particularly important role to play in the success of any significant government initiative, particularly those that require the "buy-in" of deputy ministers.

18.39 We are pleased to observe that the Secretariat intends to require departments, by 2001, to prepare the financial information within their Reports on Plans and Priorities and their departmental Performance Reports on a full accrual basis. This will encourage departments to develop, and integrate into their day-to-day management, comprehensive costing systems capable of providing the costs of individual business lines and related components to enable managers to link this information to results achieved.

18.40 We support this intention. We believe that such a move, together with the move to accrual-based appropriations and the active support of the Privy Council Office, will encourage departments and particularly deputy ministers to integrate FIS into their day-to-day management activities.

18.41 Departments need to put in place the necessary infrastructure, including appropriate systems and human resources, to achieve the full vision of FIS.

Focus of the Audit

Observations and Recommendations

FIS Project Management

18.44 We expected that the Secretariat would provide overall project management of FIS, including:

• developing an ongoing risk management process;
• providing appropriate guidance and assistance to departments;
• developing an appropriate accounting and systems framework;
• monitoring the implementation of FIS at both the centre and within departments;
• monitoring the overall costs of FIS implementation; and
• facilitating training and change management at the centre and within departments.

18.46 For the development and implementation of the central systems component, the Receiver General and the Secretariat embarked on a process of joint continuous risk management in January 1997. This resulted in a risk assessment, which was completed in April 1997 and focussed primarily on the Central Financial Management and Reporting System component of the central systems. In addition, this led to joint risk management workshops, which are held periodically to identify, monitor and mitigate risks. The latest workshop was held in June 1998 with an objective to "build on previous risk assessments and identify any additional risks associated with government-wide transition and implementation of FIS." This joint risk management process identified a number of central system transition risks to be mitigated by the Secretariat, such as the need for a Master FIS Implementation Plan for years 2000 and 2001, the need for risk assessments of departmental readiness and the cost of departmental systems. The transition is the three-year period, starting in 1999, during which departments will move to the new central systems, a process that will be key to the success of FIS.

18.47 To help departments with their move to the new FIS environment, the Treasury Board Secretariat has, to date, provided departments with a common chart of accounts, a departmental FIS-readiness checklist and a number of draft accounting policies. In addition, the Receiver General has provided guidance on input/output requirements. To allow them to finalize system requirements, departments are looking to the Secretariat and the Receiver General for final versions of these documents and policies as well as guidance on accounting policy areas not yet addressed.

18.48 FIS implementation plans and costs. The FIS implementation is scheduled to take place over three years starting in April 1999. We recognize that the Treasury Board Secretariat is aware that Year 2000 is a departmental priority at this time. However, we believe that the Secretariat needs to become fully aware of departmental FIS implementation plans and actions in order to facilitate and monitor overall progress. In this respect, we were pleased to note that the Secretariat accepts responsibility to monitor departmental implementation plans and to expand the related continuous risk assessment process. To this end, it has requested preliminary information from departments in a special section of their business plans filed in June 1998. We will review and assess the adequacy and use of this information in future audits. With few departments committing to the 1999 implementation date, and if few commit to implementing in 2000, then the last year of implementation (2001) will, by default, be extremely busy. This will place significant stress on FIS implementation at that time.

18.49 While better cost information for decision making is an expected benefit of FIS, we note that neither individual departments nor the government overall are aware of the full costs of implementing FIS, which could be significant. We recognize that much of the work on FIS also supports other objectives such as upgrading aging financial systems and making systems Year 2000-compliant. However, we are concerned that no one is monitoring the overall cost of implementing FIS. The 1995 Treasury Board submission required that the Secretariat report back to the Treasury Board on the projected costs of FIS, including departmental implementation. This has not yet been done.

18.50 The Secretariat recognizes that change management is important and has developed a formal FIS Training Framework. Although the time frame is short, we found this framework to be well thought out and comprehensive, with a clear recognition of the significance and broad nature of the training required to ensure success of the broad vision of FIS. We will assess the progress of implementation of the training plan in future audits.

18.51 The Treasury Board Secretariat should implement its plans to expand its continuous risk assessment process and to monitor and facilitate the implementation of FIS government-wide to help ensure that the full benefits of FIS are achieved.

18.52 In future audits, we will continue to monitor actions currently under way and planned by the Secretariat to:

• ensure that its risk management process includes all aspects of FIS, from government-wide financial reporting to information for managing departmental business lines, and covers the entire FIS implementation period, as well as that all significant risks are identified, monitored and updated on an ongoing basis;
• determine the status and completeness of the FIS implementation plans of departments and monitor their progress;
• finalize appropriate accounting and other FIS-related policies and communicate these to departments; and
• determine and report to the Treasury Board and to Parliament the full costs of FIS implementation.

Adequacy of Control Frameworks

18.54 We found that the Secretariat had developed such guidance, referred to as the "FIS Control Framework", to describe how the financial accounting and controls will work under the new FIS environment, including a high-level explanation of the links between the central and departmental systems. This overall framework provides a guide to the development of more detailed plans required for the design and implementation of the central systems and the individual departmental financial systems. However, the framework focusses on financial accounting and controls but does not provide guidance on how to establish stronger financial management capabilities, such as the integration of FIS into departmental management decision making as outlined in paragraphs 18.21 to 18.24 .

18.55 The Receiver General has prepared a more detailed "Receiver General Control Framework" for the development and implementation of the central systems. However, the departments included in the scope of our audit had not yet prepared a detailed plan (control framework) for the post-implementation FIS environment or for the transition from the existing basis to the full accrual basis of accounting.

18.56 The FIS and Receiver General control frameworks reasonably describe the financial accounting and control environment after FIS is fully implemented, but only as it relates to external financial reporting in the Public Accounts of Canada. Key types of transactions, for example, physical assets and inventories, required in future years to introduce full accrual accounting within departments for day-to-day management of business lines and related components are not included.

18.57 Departments will move to the new FIS environment over a three-year period starting in 1999. During this transition period, some departments will be FIS-compliant and some will not - that is, some will produce financial information on the full accrual basis while others will still be using the existing accounting basis. All of this information will need to be brought together, at the centre, on one basis, to produce the summary financial statements of the Government of Canada. While the Receiver General is currently in the process of preparing an addendum to its control framework to cover this transition period, we found that the overall FIS control framework prepared by the Treasury Board Secretariat does not adequately describe the accounting and control environment that will be required during this transition period.

18.58 Treasury Board Secretariat's FIS Master Implementation Plan lists tasks that, according to Secretariat officials, will deal with each of the matters described above. In future audits, we will monitor progress in carrying out this important work.

18.59 The Treasury Board Secretariat and Receiver General should implement their plans to provide guidance, such as control frameworks, covering all types of transactions required for the full implementation of FIS.

18.60 The Treasury Board Secretariat should implement its plans to:

• describe the accounting and control environment for the transition period;
• provide guidance to departments on the integration of FIS into departmental decision making; and
• facilitate the development of departmental plans that cover both the post-implementation FIS environment and the transition period.

Systems Renewal: Development and Implementation of New Central Systems

18.63 We expected that the Receiver General would develop central systems that met user requirements, were subject to appropriate project management procedures, and were consistent with the overall FIS control framework.

18.64 Overall, the development of the central systems was consistent with the FIS and Receiver General control frameworks. To determine the information requirements of central agencies and other users of government-wide information, the FIS Project Office carried out a fairly extensive consultation process with Treasury Board Secretariat, Finance, Receiver General and Statistics Canada officials. These requirements were included in the formal request for proposal for the design of the new central systems.

18.65 The Receiver General has extensive project planning and management processes for the development and implementation of the new central systems. We found that these processes, which focus on ongoing risk management, were generally working well.

18.66 For example, the risk management process has identified that some development is behind schedule but, according to Receiver General officials, the central systems implementation should take place as planned in April 1999. The risk mitigation plan for these schedule delays calls for the compression of the testing period and has moved the start date of the preproduction pilot several months closer to the planned implementation date. In addition, some of the central systems will not be ready to be tested until later in the preproduction pilot. This increases the risk of omission (items not tested) and leaves less time for corrective action, if problems are identified.

18.67 Once the central systems are implemented in April 1999, there will be a three-year transition period during which departments will move from the existing Central Accounting System to the new central systems. This transition will be particularly important for the Receiver General because, during that period, there will be two central systems in operation (the old and the new). In addition, during this transition period, there are conversion risks, at individual departments as well as at the Receiver General, as departments move to the new environment. Since the risk of errors increases in an environment of constant change, the need for ongoing risk management covering this transition period is critical. While the Receiver General's ongoing risk management process had been focussed on the risks associated with the current central system development, we note that transition-related risks were formally added to the Receiver General's risk issues summary during the latest joint Receiver General-Treasury Board Secretariat risk management workshop held in June 1998. In addition, the Receiver General has various contingency plans in place in the event that systems do not work as planned.

Systems Renewal: Development and Implementation of New Departmental Systems

18.69 Some departments have already implemented their new systems while others are at various stages of planning, development or implementation. We reviewed the implementation of six departmental financial systems (see About the Audit ), with a view to determining the lessons learned that could provide guidance to the departments that have yet to implement their new systems. Exhibit 18.7 provides examples of lessons learned identified by the financial system developers themselves.

18.70 We also identified a number of additional findings that specifically relate to implementation of the departmental financial systems and the significant challenges that affect all the departments. The following paragraphs summarize our findings on the risks the government faces in implementing the full vision of FIS.

18.71 Management reporting. Given that the use of financial information for management decision making is one of the key objectives of FIS, we expected to find that the new financial systems would have management reporting capabilities. However, we found that none of the systems we reviewed had adequate management reporting in place. We noted, though, that each department had plans to meet this requirement in the future.

18.72 Organizational change. Departments will undergo significant change if they meet the full vision of FIS. New financial systems, full accrual accounting, and responsibility for detailed financial information will all add a new dimension to the role of departments. The Treasury Board Secretariat has already recognized the importance of managing the significant changes required to achieve the full vision of FIS.

18.73 However, as previously noted, departments have not yet incorporated in their systems the capability to allow departmental line managers to meet the broader FIS vision for management decision making. We found a wide range of management plans for access to basic financial information, from access limited to financial managers to access provided to all managers. Since it is still early in the life of FIS, we would expect the departments to prepare plans for how they intend to meet FIS goals for better financial information for use by managers. We will monitor progress in this area as part of our future audits.

18.74 Costs. We found that departments need to do a better job of estimating and tracking resources used to implement new systems and other major projects as a matter of good project management. Since one of the objectives of FIS is better information for management decision making, it would set a good example to "walk the talk" with departmental implementation of FIS. As explained in paragraph 18.49 , we recognize that much of the work on FIS also supports other departmental objectives. However, the identification and capture of FIS implementation costs is currently ad hoc and unorganized. We also found that when the financial systems were purchased, there was no calculation in departments of total life cycle costs, including the future costs for maintenance, enhancements and upgrades. We believe that these future costs are significant because they typically represent the largest part of the investment in major systems development.

18.75 Controls and security. We found that the plans for security and management control in the financial systems we reviewed were weak, for example, access and document authorization. We are concerned that without appropriate operational controls, there is the risk of lapses in sound financial management. These types of management and systems controls need to be considered before the design is declared complete. They are more difficult to implement after the system is operational. We are also concerned that without appropriate system access controls, particularly for developers, changes could be made that compromise the integrity of the system.

18.76 Resources. Implementing these financial systems is extremely resource-intensive. Some departments reported that their biggest concern is the difficulty of obtaining and retaining experienced, skilled resources. Since many departments are looking for the same resources at the same time, they tend to compete with each other and create a temporary scarcity. We expected to see this risk dealt with by the Treasury Board Secretariat and the cluster groups (described in the Appendix). In most instances, however, the government has chosen to rely on private sector consultants who, in trying to meet the demands for services, are themselves still learning about the systems. Some departmental managers found that they must pay close attention to consultants' work to ensure that they are getting full value. This is all the more difficult because departmental staff are still becoming familiar with the system. In addition, one of the lessons learned by departments (see Exhibit 18.7 ) was ensuring that appropriate knowledge transfer occurs from consultants to departmental staff.

18.77 Internal audit. We expected that departmental internal audit groups, where they have the expertise, would play a key role in reviewing progress, reviewing risk assessments, conducting reviews of security and management controls, and establishing requirements for auditability and data integrity. This would help ensure the success of both the implementation of new departmental financial systems and the move to FIS.

18.78 In one department we found that internal audit played a key role where the auditors were involved with the project team from the beginning. However, we also found that, in most cases, auditors do not yet have the training and expertise to audit the complex requirements for authorizing and controlling actions that exist in the shared systems.

18.79 The Treasury Board Secretariat should provide additional guidance to departments on the development of their departmental FIS implementation plans. To ensure that these plans are complete, departments should ensure that they include the following provisions:

• management reporting requirements under the FIS environment;
• a change management plan showing how management and staff will be reoriented, reorganized and retrained to meet all of the requirements of the new FIS environment, not just the systems renewal component;
• periodic determination and reporting of the full life-cycle cost of their FIS implementation;
• a plan for security and management controls that would be subject to an external review prior to putting the new systems into production;
• a plan to manage the risks associated with the current lack of experienced, expert resources for systems implementation and enhancement; and
• the role for, and the training of, departmental internal audit groups in reviewing progress, reviewing risk assessments, conducting reviews of security and management controls, and establishing requirements for auditability and data integrity.

Conclusion

18.81 The most significant challenge will be to integrate FIS into day-to-day departmental decision making. The full benefits of FIS will be realized only through the provision of more complete information on the costs of business lines and related components to enable managers to link this information to results achieved when making key decisions.

18.82 Through changing the basis on which Parliament appropriates funds, the government and Parliament can help ensure that FIS is successfully implemented. But this, by itself, is not enough. Central agencies and departments must also act to help ensure that the government achieves the full vision of FIS. Central agencies can help lay the foundation for success by requiring departments to prepare their Reports on Plans and Priorities as well as their departmental Performance Reports on a full accrual basis, and by obtaining complete departmental "buy-in" to the full vision of FIS. Deputy ministers of departments must then ensure that all the necessary infrastructure is put in place within each of their departments, including appropriate systems and human resources, to fully achieve the objectives of FIS.

18.83 The FIS Control Framework reasonably establishes the financial accounting and controls required under FIS. However, no guidance has yet been provided on the required integration of FIS into departmental management decision making as envisioned under FIS. In addition, more guidance is required on the accounting and control environment that will be required during the planned three-year transition period during which departments will move from the old Central Accounting System to the new FIS environment.

18.84 The central systems have been developed in a manner that is consistent with the FIS and Receiver General control frameworks. The lessons learned from the implementation of new departmental financial systems need to be gathered and communicated to those departments that have yet to implement their new systems.

18.85 Given the large-scale financial systems renewal exercise under way, we believe there is a unique opportunity to put the full vision for FIS in place by the 2001 target implementation date. To achieve this vision, and thus have in place the information required for government today, the challenges faced by the government and summarized in this chapter must be met. In future audits, we will continue to assess the government's progress toward achieving the full benefits of FIS.

Treasury Board Secretariat's comments: The government agrees that FIS is a key vehicle to enable changes, such as the modernizing of comptrollership, that are important to both governance and management. The chapter describes the main challenges that face the government in implementing FIS and notes that either they are being addressed or plans are in place to address them.

We offer the following comments on the three strategic challenges that are highlighted:

• Integration of FIS into departmental management: This will take place over a long period of time, as it requires not only an improvement in available information but also a change in culture. The implementation of the comprehensive FIS Training Framework will go a long way toward meeting this challenge.
• Moving to accrual-based appropriations: The views of the Office of the Auditor General on this important subject are appreciated. But there are alternatives to be considered and stakeholders, including Parliament, to be consulted before the Treasury Board Secretariat makes a formal proposal to change the basis of appropriations.
• Obtaining departmental buy-in: The involvement of senior financial officers (SFOs) from across government in the four oversight committees that governed FIS from November 1995 to March 1998 helped considerably with this challenge.

About the Audit

Objectives and Criteria

• whether the FIS and Receiver General control frameworks provide an adequate framework for the new accounting environment by dealing with all significant risks;
• whether the central systems are designed, developed and implemented in a manner consistent with the FIS and Receiver General control frameworks; and
• whether the development and implementation of a selection of departmental financial systems are adequate and could provide lessons learned for those departments that will be implementing their new financial management systems in the future.

Scope

The departmental system implementations selected were at Public Works and Government Services Canada, Treasury Board Secretariat/Department of Finance, Correctional Service Canada, Fisheries and Oceans, Transport Canada and Foreign Affairs and International Trade Canada.

Approach

Audit Team

Martine Carrier
Peter Taylor

For information, please contact Eric Anttila or Andrew Lennox.

Appendix A - The Historical Background Leading to FIS