This Web page has been archived on the Web.

1998 December Report of the Auditor General of Canada

Main Points

23.2 In September 1995, pension reform legislation came into effect. The legislation resulted in fundamental changes in responsibilities for the disability pension program. The Department took on new roles in providing assistance and counselling to disability pension applicants and in adjudicating first decisions for pension claims. The Veterans Review and Appeal Board was formed at that time to hear reviews and appeals of decisions.

23.3 The main focus of the disability pension program since pension reform has been on reducing the time it takes to make pension decisions. Veterans Affairs Canada and the Veterans Review and Appeal Board have exceeded their targets for reducing turnaround times for disability pension decisions.

23.4 The quality and consistency of the services provided in the preparation of first applications could be improved through greater use of standardized guidance materials and training for all those involved in the preparation of first applications. The table of disabilities, which is used in determining the nature and extent of disability for pension purposes, provides limited guidance for assessing the extent of some disabilities. To ensure consistent and high-quality disability pension decisions, the Department needs to improve its guidance materials that facilitate entitlement and assessment adjudications.

23.5 Veterans Affairs Canada does not provide reasons for assessment decisions. There is a need for the Department and the Veterans Review and Appeal Board to regularly analyze the reasons for overturned pension decisions.

23.6 Veterans Affairs Canada is not fully utilizing the departmental review process. This process was put in place by pension reform legislation and allows certain initial decisions to be reviewed more efficiently and in less time than a formal review request to the Veterans Review and Appeal Board.

23.7 Within the next 10 years, the mix of disability pensioners will change considerably, with a significant increase in the number of former or current peacetime members of the Canadian Forces. The Department needs to inform Parliament of the changes in its client base and the strategy for addressing those changes.

23.8 Veterans Affairs Canada has assigned a high priority to its Year 2000 projects. It has a plan and schedule that is expected to achieve Year 2000 compliance for its mission-critical systems by the end of 1998. However, the Department is also dependent on other systems for information, and disruption of those systems could affect the delivery of the disability pension program.

Introduction

Background and purpose of the disability pension program

23.10 Canada first began paying veterans pensions in 1917. After the Second World War, the veterans charter was established, giving veterans certain rights, privileges and benefits. The primary obligations undertaken by the government were the care and compensation of veterans who returned home wounded and disabled and the re-establishment of returning veterans into civilian life. The provision of disability pensions continues to be the largest single component of these ongoing obligations. In addition, the disability pension program is a gateway that provides eligibility to other programs provided by the Department, particularly health care benefits.

Responsibility for pension decisions

23.12 The Department is responsible for counselling and assisting pension applicants, making the initial decisions on disability pensions, determining the amount of pension awards and administering the payment of awards. As well, the Department's Bureau of Pension Advocates provides advocates to represent veterans and other eligible clients appearing before the Veterans Review and Appeal Board.

23.13 The Veterans Review and Appeal Board is an independent body reporting to Parliament through the Minister of Veterans Affairs. Board members are Governor in Council appointees. The Board is responsible for making decisions on reviews and appeals by applicants who are dissatisfied with pension decisions.

23.14 In 1997-98, the cost of delivering disability pension benefits was approximately $29 million for the Department (including $5 million for the Bureau of Pension Advocates) and $8 million for the Veterans Review and Appeal Board.

The pension recipients

23.16 There are three major groups within the population of disability pensioners. The first group consists of veterans of the First and Second World Wars and the Korean conflict. This group of war service veterans has an average age approaching 78 years.

23.17 The second group of pension recipients consists of those who served in the Canadian Forces during peacetime, including those who served in Special Duty Areas. Special Duty Areas are usually associated with United Nations peacekeeping missions and are listed in Chapter 350 of the Consolidated Regulations of Canada. Peacetime pension recipients are generally younger than war veterans; most are under 65 years old. In conjunction with National Defence, initiatives are currently under way to improve service to these clients through better working arrangements and information exchange between the two departments. These initiatives are discussed further in paragraphs 23.78 and 23.79 .

23.18 The third group of pension recipients includes survivors of pensioners. Survivor benefits are based on the pension that had been or would have been awarded to the pensioner prior to death.

23.19 Composition of clientele is changing. The total number of recipients of disability pension benefits has remained relatively constant over the past decade. In 1997-98, the Department provided pension benefits to a total of 151,500 recipients, consisting of 68,000 veterans, 25,500 current or former peacetime members of the Canadian Forces and 58,000 survivors. The composition of the clientele is shifting from war service disability pensioners toward survivors and peacetime disability pensioners. As shown in Exhibit 23.1 , the Department estimates that by the year 2007, its disability pension clients will total about 145,000. Although this number is comparable with the current number, the mix of recipients will be significantly different, consisting of about 38,000 veterans, 41,000 former or current members of the Canadian Forces and 66,000 survivors.

23.20 In 1997-98, approximately 49 percent of new disability pension program clients were members or former members of the Canadian Forces who served in peacetime or personnel who served in a Special Duty Area. By the year 2006-07, the Department projects that this figure will rise to 60 percent. The number of applications for disability pension benefits received from this client group is a significant factor in the future of the Department, as the average age of these applicants is under 65 years. Exhibit 23.2 compares the age distribution of war service veterans and Canadian Forces disability pensioners.

Entitlement to disability benefits is determined by nature of service

23.22 The insurance principle applies to clients with wartime service and includes peacekeepers who served in Special Duty Areas such as Haiti, Rwanda or the former Yugoslavia. Entitlement is granted on the basis of whether disability or death is attributable to, aggravated by or incurred during service. The government assumes complete responsibility for death, illness or injury 24 hours a day. Members of the Canadian Forces who qualify under the insurance principle, such as injured peacekeepers, can receive compensation while serving in the Canadian Forces.

23.23 For peacetime members of the Canadian Forces, entitlement to disability pension benefits is compensation for disabilities that are service-related. Currently serving members of the Canadian Forces may submit applications for disability pensions to Veterans Affairs Canada. For those eligible under the compensation principle, benefits commence upon discharge from the Canadian Forces. Benefits commence immediately for members of the Reserve Force who receive a favourable decision under the compensation principle. Exhibit 23.3 provides a summary comparison of the applicability of the insurance and the compensation principles.

23.24 Disability pensions are awarded based on the extent to which a disability is related to service (entitlement) and on the nature and extent of the disability (assessment). Favourable entitlements for pension awards are rendered in fifths. Awards of one-fifth to four-fifths entitlement indicate that the disability is deemed to be partially service-related.

23.25 The pension legislation includes a long-standing "benefit of the doubt" provision. This provision requires, in making a decision, that every reasonable inference in favour of the applicant be drawn, that any uncontradicted evidence presented by the applicant that is credible in the circumstances be accepted, and that the decision resolve in favour of the applicant any reasonable doubt as to whether the applicant has established a case.

Assessing the extent of disability for pension awards

23.27 A diagnosis and medical evidence are required to assess the nature and extent of disability for pension purposes. The Pension Act establishes the requirement for a table of disabilities to provide guidance to physicians and surgeons in assessing the extent of a disability.

Determining pension amounts

23.29 Monthly pension rates are based on the extent of disability, marital status and number of eligible dependants. These benefits are not subject to personal income taxes and are not income-dependent. Exhibit 23.5 provides examples of the 1998 monthly disability pension rates. Survivor benefits are paid in proportion to the benefits that were being paid, or that would have been paid, to the disability pensioner at the time of death. One year following the date of death of the pensioner, disability pensions assessed at less than 48 percent are reduced by one half, while those assessed at 48 percent or more are converted to full survivors' pensions, which equates to 75 percent of the basic single pension.

Focus of the audit

Observations and Recommendations

Turnaround Times for Processing Pensions

Pension reform presented challenges

23.32 In September 1995, new and amended legislation was adopted to overhaul the application and appeals process for disability pensions. As part of this initiative, the government made a commitment to reduce turnaround times for processing pensions by one half, over a two-year period, without affecting veterans' pension benefits or their right to appeal. The legislative amendments, also referred to as pension reform, resulted in the following changes:

• The authority to make first decisions on claims for disability pension benefits, previously the responsibility of the Canadian Pension Commission, was transferred to the Department.
• Responsibility for preparing first applications, previously a function of the Bureau of Pensions Advocates, was given to departmental officials in district offices.
• The Bureau of Pensions Advocates, previously a separate agency responsible for both the preparation of first applications and advocacy services for appeals, was merged with the Department and retained only the responsibility for providing advocacy services for reviews and appeals.
• The Canadian Pension Commission, which was previously responsible for first decisions and the first level of appeal, and the Veterans Appeal Board, previously responsible for the second level of appeal, were combined into the Veterans Review and Appeal Board to hear first-level and second-level appeals.

• Most applications are submitted through one of forty district offices or service centres across Canada. Assistance and counselling services are provided by district office or service centre personnel to applicants in preparing a complete disability pension application supported by service records, physician statements and medical evidence.
• Completed applications are submitted to the Department's head office, where adjudicators render entitlement and assessment decisions. Departmental medical advisors are available for consultation on entitlement decisions and, except for hearing loss claims, are consulted for all assessment decisions.
• If applicants are not satisfied with the first decision, they may request a departmental review upon presentation of new evidence or they may request the Veterans Review and Appeal Board to review the decision.

September 1997 turnaround time targets have been exceeded

23.36 The Veterans Affairs Portfolio has achieved significant reductions in turnaround times for processing pensions, and has exceeded its targets for September 1997. The reduction in turnaround times has been achieved through a simplified organizational structure that resulted in fewer steps to reach decisions. The most significant reductions have occurred in the time for preparing first applications and for preparing cases for review and appeal hearings.

23.37 We verified turnaround times reported for September 1997. Our examination was based on a detailed review and compilation of turnaround times for a statistical sample of claims adjudicated during the period July to December 1997. From this examination, we determined that the information contained in the Pension Status and Inquiry System is accurate for the purposes of compiling turnaround time statistics. Exhibit 23.6 shows significant improvements in turnaround times for each type of claim.

23.38 The turnaround times reported by the Department are average turnaround times for each claim type. The distribution of turnaround times for first applications before and after pension reform are compared in Exhibit 23.7 . As shown, the average turnaround time has decreased from 18 months to 5.4 months and the variability in turnaround times has decreased significantly. In other words, since pension reform, average turnaround time as a performance indicator has become more reliable because the actual turnaround times are more closely grouped around the average. Pension claims are processed in less time and in a more predictable amount of time. Such information is useful for operational planning, accountability and development of service standards.

Service standards

23.40 During 1997-98, the Department received approximately 14,000 first applications for pension benefits. A first application is the first time that an applicant applies to receive a disability pension for a medical condition. It does not include requests to reassess existing pensioned conditions.

23.41 The Department's role in the pension application process includes providing assistance and counselling to applicants in preparing applications, obtaining information in support of the application, requesting and reviewing service records and obtaining current medical information. Exhibit 23.8 shows the distribution of turnaround times for the period January to June 1998. These turnaround times include all activities from the time an application is initiated to the time payment is requested. We noted during our audit that the process for preparing applications represented approximately one half of the turnaround time. Consequently, given the significant amount of time to prepare an application, and the role played by the Department in this step, we would expect that this part of the process would also be covered by a service standard.

23.42 Veterans Affairs Canada should develop service standards for the Department's role in preparing a first application for disability pension benefits.

Department's response: The Department agrees and therefore included such standards in its 1998 brochure"Veterans Affairs At Your Service" in the sections "Meeting Your Needs" and "Information and Advice". More specifically, in the section on "Disability Pension Application", we also state: "If you contact us about a service-related disability pension, we will help you prepare your application, help you obtain information in support of your application, answer your questions, research your records and assist you to obtain current medical information." We intend to survey our clients on the quality and effectiveness of these services.

Veterans Affairs Canada chose not to include service standards about the time to carry out these services because most of the activities involved in case preparation lie outside the Department's control, either with outside agencies or clients themselves. The service standard brochure was the subject of consultation with the Department's clients and client groups who agreed that time standards for case preparation were of lesser significance than those we chose to include on decision making and medical exams.

Making Pension Decisions

Preparing the disability pension application

23.44 The Department has developed a standard set of application forms for disability pension benefits. When completed, the application package should provide details of each medical condition claimed and its claimed relationship to the applicant's service.

23.45 We found inconsistencies in the level and nature of the services provided by the Department in counselling applicants. For example, in some offices, we noted that counselling was provided to applicants in identifying service-related disabilities other than those initially put forth by the applicants. In other instances, we found that the focus was limited to the conditions identified by the applicants.

23.46 The Department provided national and regional training throughout the pension reform process. However, the Department does not have a formal training policy for the disability pension program and we noted that some pension officers have not yet received formal training.

23.47 We also noted that the working tools used to assist in the preparation of first applications, including medical guidance materials and questionnaires, vary from office to office.

23.48 We concluded that there are opportunities to improve the consistency and quality of the services provided to applicants in the preparation of disability pension applications. By improving and implementing standardized policies, practices and procedures, the Department can obtain greater assurance that disability pension applications are completely and accurately prepared and include the appropriate supporting evidence.

23.49 The number of applications completed by each pension officer varies widely, depending on the nature of the claims. For example, hearing loss claims are more straightforward to process, compared with claims involving complex or multiple conditions, such as orthopedic injuries, which can be very difficult and time-consuming. In addition, the mix of clientele can be quite different from one district to another. For instance, nationally, the Canadian Forces members represented 45 percent of first applications in 1997-98. However, in some district offices, Canadians Forces members accounted for up to 70 percent of first applications. The service documents for Canadian Forces members tend to be quite extensive, requiring more time to review than a typical war service veteran's file. To ensure that the needs of claimants are met in an efficient and timely manner, the Department needs to review its distribution of work related to the preparation of first applications to determine where resources should be allocated.

23.50 Veterans Affairs Canada should improve the services provided to applicants in the preparation of disability pension applications by:

• improving standard national guidance materials and manuals;
• ensuring that new pension officers receive appropriate initial training on a timely basis; and
• re-examining workload distribution.

Work is under way to develop both a standardized information and procedures manual for use by field staff and a training module for pension officers to support the first application process.

The Department agrees that workload distribution is an important consideration for effective resource utilization and will continue to actively address this issue. This will be done, in part, through its ongoing Workload Standards project and through medium- and long-term human resource planning based on employee demographic and client forecasts.

Adjudication of first applications

23.52 As illustrated in Exhibit 23.9 , three key questions are addressed in the first decision process:

• Is there a medical disability?
• Does the disability relate to service?
• What is the extent of the disability?

23.54 The application must also be supported by service records. The adjudicator uses this information to determine if the disability relates to service. This is the entitlement decision. For certain medical conditions and service-related activities, the Department does have guidance materials to assist adjudicators in making entitlement decisions. General guidelines have been developed to assist in determining entitlement for certain common claims, including hearing loss and orthopedic conditions; however, for most other conditions, the guidance to link medical conditions to service needs to be improved.

23.55 Table of disabilities. The primary decision-making guidance material for assessing the extent of medical disability for pension purposes is the table of disabilities. Other guidance in the form of memoranda and directives has been provided on an ad hoc basis by medical advisors. This material assists in assessing the extent of disability for pension purposes and in performing pension medical examinations. Prior to pension reform, the table of disabilities was the responsibility of the Canadian Pension Commission. Since September 1995, the table has been the Department's responsibility.

23.56 The table of disabilities provides descriptions of various medical conditions and diseases, which are used in determining the percentage of disability for pension purposes. It was designed primarily as an aid to physicians, making it difficult for adjudicators to use in making assessment decisions. For hearing loss claims, the Veterans Affairs Portfolio has developed guidance materials to determine the extent of disability for pension purposes. For other conditions, we found a lack of guidance material to link the medical condition claimed to the percentage of disability for pension purposes. Therefore, except for hearing loss claims, medical advisors are consulted in the assessment of claims. This practice highlights the need for additional guidance materials to support the table of disabilities. For example, in the case of an osteoarthritis hip condition, the table of disabilities provides only the following limited guidance:

• mild - 10-25 percent;
• moderate - 25-35 percent; and
• severe - 35-50 percent.

23.58 Information on all pension claims is recorded in the Department's Pension Status and Inquiry System. The Department's Pension Disease Classification Manual provides a standard coding structure for coding medical conditions in this system. In Canada, this coding structure is unique to Veterans Affairs Canada.

23.59 Interim assessments. Interim assessment decisions are rendered when, at the time of adjudication, there is sufficient information to establish entitlement to disability pension benefits but there is not sufficient information to assess the level of disability unconditionally. Interim assessments result in applicants receiving a pension award faster.

23.60 In the sample of claims we reviewed, we noted that approximately one third of favourable first applications during the period July to December 1997 were processed into payment using interim assessments. Based on departmental data, we calculated that it took an average of 3.5 months to schedule and complete a final assessment in cases where an interim assessment had been made.

23.61 We noted that the Department does not have a written rationale for the level of assessment determined for individual claims, such as the relevant information that was reviewed, the key factors analyzed or the degree of consideration given the various factors in rendering an assessment decision. Such documentation would facilitate review and would be useful in determining trends in decisions overturned on review and appeal. Decisions rendered by Veterans Affairs Canada are communicated to applicants in decision letters. These letters do not provide any explanation for the assessment of the level of disability.

23.62 Veterans Affairs Canada should improve guidance materials to be used in making entitlement decisions and in assessing the extent of disability for pension purposes. The guidance materials should be revised periodically to reflect the trends of disability pension claims.

23.63 The Department should document the reasons for assessment decisions and provide these reasons to applicants.

Department's response: The Department agrees. Efforts are under way to address these concerns through improvements to the Department's Table of Disabilities and Medical Guidelines. These improvements should in turn enable the Department to better articulate the reasons for assessment adjudications for the benefit of applicants and pensioners.

Review and appeal process

23.65 As previously described, the Department's officials make the decision on a first application for disability pension benefits. The results of a first decision are conveyed to applicants in a decision letter. If applicants are not satisfied with this first decision, they may notify the Department that they disagree. The Pension Act provides that the Department may, on its own motion, review a pension decision where it appears there was an error in a finding of fact or law. In addition, upon presentation of new evidence, clients may request a departmental review.

23.66 If applicants are not satisfied with the results of the first decision or departmental review, they may request a review by the Veterans Review and Appeal Board. After a review of the facts, the Board may send a case back to the Department, may hold a review hearing or may in certain circumstances refuse to hear the case.

23.67 If a review hearing is scheduled, applicants have the right to appear before the Review Panel where they are usually represented by an advocate from the Bureau of Pension Advocates. The advocate represents the applicant throughout the review and appeal process without charge.

23.68 If applicants are not satisfied with the decision made by the Review Panel, they may appeal the decision to an Appeal Panel of the Veterans Review and Appeal Board. Only documentary evidence may be submitted at this stage, and it is usually presented to the Appeal Panel by an advocate on behalf of the applicant.

23.69 Exhibit 23.10 shows the outcome of a sample of 126 first applications examined during our audit. Fifty-seven applications received favourable rulings at the first decision level, nine received favourable rulings at the Veterans Review and Appeal Board review level and four more received favourable rulings at the Board appeal level. At the first decision and Board review levels, a favourable ruling is defined as a ruling that is both favourable and acceptable to the applicant.

23.70 In our sample, we found that 54 percent of applicants who were dissatisfied with the rulings at the first level had the decision reviewed by the Board's Review Panel. We also found that 83 percent of unfavourable or unsatisfactory Board Review Panel decisions went to an appeal hearing. As noted in the exhibit, these figures are conservative, as additional favourable decisions may be rendered with the passage of time. There is no time limit within which an applicant must request a review or an appeal of a pension decision. Of the 37 claims appealed to the Board's Review Panel, 13 claims, or 35 percent, were overturned at the review or appeal levels.

23.71 During our review of Veterans Review and Appeal Board decisions and of analyses performed by the Department, we noted several reasons for decisions being overturned on review or appeal. Examples include the application of the "benefit of the doubt" provision of the Pension Act , the introduction of additional evidence (including oral testimony of the applicant at the review level) and different interpretations of the law, especially in matters of entitlement. In some cases, the reasons given by the Board for overturning departmental decisions were not fully articulated. At the Veterans Affairs Portfolio level, systematic analysis of decisions, based on clearly documented reasons for the decisions, could provide opportunities to improve the pension decision-making process.

23.72 In order to improve the quality and efficiency of decision making, the Veterans Affairs Portfolio should carry out regular analyses of the reasons for decisions that are overturned by the Veterans Review and Appeal Board.

Department's response: The Department is committed to the provision of high-quality, consistent and timely decisions. We have previously conducted analyses of the reasons for decisions of the Veterans Review and Appeal Board. We will continue to do so on a regular basis in the future.

Veterans Review and Appeal Board response: Agree. As has been the case since its creation, the Board continues its commitment to quality and the continuous production of fully articulated decisions. To achieve this goal, the Board will continue to provide intensive training to its members on all aspects of the adjudicative process, including the legislation, medical and legal issues, the conduct of a hearing and decision writing. Quality assurance is a priority for Board staff and members.

23.73 As described in paragraph 23.65 , one of the legislative amendments effected under pension reform was Section 82 of the Pension Act , dealing with departmental review. This review process, which can be used for certain cases such as an error in fact or the presentation of new evidence, is quicker and less costly than the Veterans Review and Appeal Board process. In addition, it does not require the applicant to forfeit any right to review or appeal a decision to the Board. The Department has made a commitment to render a decision on a departmental review within four weeks. The average turnaround time for reviews heard by the Veterans Review and Appeal Board is approximately four months.

23.74 During our examination, we noted that for 3 of the 23 Board reviews and appeals we examined, additional evidence was submitted and formed the basis for overturning the previous decision. In addition, our review of departmental data shows that the average number of departmental reviews per month has fallen from 45 in 1997-98 to 26 for the first five months of 1998-99.

23.75 To improve the efficiency and timeliness of decision making in the disability pension program, Veterans Affairs Canada should examine opportunities to make greater use of the departmental review process.

Department's response: The Department is pursuing various means of improving the efficiency and timeliness of decision making for the disability pension program. It is agreed that in certain circumstances, use of the departmental review process could be exploited further. The Department will undertake to clarify and to communicate appropriate use of this tool.

The Changing Nature of the Department's Clients

23.77 The Department has estimated that within 10 years, war service veterans will form the smallest group of disability pensioners. The largest client group of disability pension recipients will be survivors, followed by former or current peacetime members of the Canadian Forces. As shown in Exhibit 23.2 , Canadian Forces disability pension clients are much younger than war service clients. As the pensioner population changes, it is important that the Department consider options for delivering services to clients efficiently and economically.

23.78 Veterans Affairs Canada and National Defence have recognized the increasing prevalence of peacetime members of the Canadian Forces as clients of Veterans Affairs. The departments have been working together to enhance communication, to develop a closer relationship between the two departments and to improve Canadian Forces members' access to Veterans Affairs Canada services and benefits.

23.79 A Veterans Affairs-Canadian Forces co-ordination team has been established within Veterans Affairs Canada. This team was formed to provide a central co-ordination point in the Department for all matters concerning Veterans Affairs Canada and National Defence, to identify issues of mutual concern between both departments, to facilitate action and to monitor progress on improvement initiatives between the two departments. Each department has appointed a liaison officer to be part of an exchange program that will further enhance co-operative working arrangements.

23.80 We reviewed Veterans Affairs Canada's 1998-99 Report on Plans and Priorities, tabled as part of the Estimates. The document makes little mention of the Department's role in relation to the peacetime members of the Canadian Forces or how the Department will change to fulfil this increasingly important role in the future. We expected that Veterans Affairs Canada would use this key accountability document to explain the changing nature of clients and the strategy for adapting to the changes.

23.81 In reporting to Parliament through its Report on Plans and Priorities, Veterans Affairs Canada should explain the role it plays in relation to the peacetime members of the Canadian Forces, the changes expected in its client base and its strategy for adapting to these changes.

Department's response: Veterans Affairs Canada is currently analyzing the medium- to long-term changes of its client base, including Canadian peacetime forces. The 1999-2000 Report on Plans and Priorities will report on the Department's role concerning peacetime forces as well as on an approach to address these changes.

Year 2000 Compliance

Year 2000 compliance is a departmental priority

23.83 Many of the Department's systems use a six-digit date format. Dates are used extensively for important calculations. For example, the effective date of a disability pension award is used to calculate the payment amount. An incorrect interpretation of a year 2000 effective date could have a serious impact on payment calculations. A failure of any of the Department's mission-critical systems could affect many Canadians since the systems provide a major source of income and access to services and benefits.

23.84 In 1996, the Department initiated a Year 2000 project. The Treasury Board Secretariat has identified the Department's health care systems and the pension and allowance systems as government-wide mission-critical systems. The Secretariat is closely monitoring progress toward Year 2000 compliance for all such systems. The Department is also tracking its Financial Management Information System as a mission-critical system because of its importance for administrative and financial control. We reviewed the Department's actions to make the pension and allowance systems Year 2000-compliant.

23.85 One of the departmental business renewal initiatives currently under way is the Benefits Redesign Project. As part of this initiative, a new Client Service Delivery Network system is being implemented. This system is designed to be Year 2000-compliant. Since the original planned implementation date of 1999 was too late for full resolution of Year 2000-related problems, the project was rescoped and rescheduled to be the primary Year 2000 system. In addition, the Department has adopted a strategy of converting existing systems as a contingency to ensure Year 2000 compliance while implementing the new business renewal systems.

Work on mission-critical systems is well under way

23.87 Implementation of the Client Service Delivery Network is planned to occur in phases, with the first release planned for December 1998 and the second release planned for March 1999. Through various initiatives, the Department has been able to secure adequate staff resources to carry out projects related to Year 2000 compliance. Project funding has also been secured. Total project costs, estimated as of July 1998, are $51 million for the Veterans Affairs Portfolio's systems.

Dependency on non-departmental systems

23.89 As of July 1998, the Department was beginning an assessment of its facilities and embedded systems to determine the extent to which they may be affected by the Year 2000 problem. Embedded systems consist of hardware and software that form a component of some larger system and are intended to operate without human intervention. These systems and facilities include, among others, telecommunications systems, building maintenance and energy management systems and security systems.

23.90 The assessment was to be completed by the fall of 1998, with the majority of the required remedial expenditures to occur in 1999. The Department is working in conjunction with Public Works and Government Services Canada (PWGSC), Health Canada and other government departments on the compliance issues related to embedded systems. At the completion of our field work, the Department was surveying regional and district offices in co-ordination with PWGSC to develop an inventory of affected systems.

23.91 The Department has developed an appropriate plan and is working toward resolving the Year 2000 problem in its government-wide mission-critical systems. We believe that the Department is appropriately managing the risks of the problem. However, because of embedded systems, facilities and the interaction of departmental systems with other government and non-government systems, it is impossible to give assurance that the Department will not suffer some effects from the Year 2000 problem. The Department is now beginning to address concerns about systems that are not mission-critical but could affect operations.

Conclusion

About the Audit

Objective

Scope

Criteria

• Veterans Affairs Canada would have the means to ensure that high-quality disability pension decisions are made to consistently reflect the requirements and intent of governing legislation;
• the Veterans Affairs Portfolio would collect and report accurate, relevant and reliable information on the length of time taken to reach decisions on disability pensions; and
• the Veterans Affairs Portfolio would have made sufficient progress against its Year 2000 plan to ensure that concerns that could affect the timely processing of pensions have been addressed.

Audit Team

Donald MacNeill
Heather McManaman
Kimberlea Redden

For information, please contact John O'Brien.