Report of the Auditor General of Canada to the Board of Directors of the Freshwater Fish Marketing Corporation—Special Examination—2017

Opening Statement to the Standing Committee on Public Accounts

Report of the Auditor General of Canada to the Board of Directors of the Freshwater Fish Marketing Corporation—Special Examination—2017

(Freshwater Fish Marketing Corporation—Special Examination—2017)

19 October 2017

Clyde MacLellan, Fellow Chartered Professional AccountantFCPA, Fellow Chartered AccountantFCA
Assistant Auditor General

Mr. Chair, thank you for this opportunity to present the results of our special examination of the Freshwater Fish Marketing Corporation. Joining me at the table is Heather McManaman, the Principal who was responsible for the audit.

A special examination of a Crown corporation is a type of performance audit. Specifically, a special examination determines whether a Crown corporation’s systems and practices provide reasonable assurance that its assets are safeguarded and controlled, its resources are managed economically and efficiently, and its operations are carried out effectively.

The Freshwater Fish Marketing Corporation was established in 1969 to market and trade—both inside and outside Canada—freshwater fish caught in Western and Northern Canada, as well as the by-products of that fish.

Our examination of the Corporation covered the period from October 2015 to June 2016.

The Corporation has faced many external challenges in recent years. These challenges included considerable risks associated with a complex and changing business environment. For example, the supply of whitefish increased at the same time that Canadian sanctions on Russia reduced the number of buyers for this fish. Also, the province of Manitoba gave notice that it intended to withdraw from its agreement under the Freshwater Fish Marketing Act and therefore eliminate the Corporation’s exclusive right to purchase fish caught in the province.

Our special examination identified many significant deficiencies in the Corporation. As a result of the pervasiveness of these significant deficiencies, we concluded that the Corporation had not maintained its systems and practices in a manner that provided reasonable assurance that its assets were safeguarded and controlled, its resources were managed economically and efficiently, and its operations were carried out effectively.

We refer to this type of conclusion as an adverse opinion, which is the strongest negative assessment that we can give in a special examination.

In several ways, we found that the Board of Directors and management failed to meet their responsibilities for oversight and management of the Corporation.

Specifically, we found that the Board did not ensure that the Corporation’s strategic plan was up to date and provided clear strategic direction to management. Furthermore, management had not provided and the Board had not reviewed updated risks and risk-mitigation measures since 2014. Consequently, management did not have strategies in place to mitigate the significant events that affected the Corporation. This greatly limited the Corporation’s ability to meet its objectives, make long-term commitments, and make timely decisions about its future.

We found that management disregarded key controls. For example, management created positions without job descriptions and filled them without competitive or merit-based processes. Also, management disregarded the Corporation’s Procurement and Purchasing Policy when it purchased certain pieces of capital equipment without a proper business case analysis. Some of this equipment was never used in the Corporation’s plant because it did not meet its needs.

We also found that some plant workers had not taken compulsory health and safety training and that a hazard prevention program was not finalized. If these health and safety issues are not addressed, they could lead to employee safety incidents and expose the Corporation to significant losses.

Finally, we found that, despite the recommendations we made in our 2005 and 2010 special examinations, the Corporation’s targets and standards for yield, capacity, and labour efficiency still had not been reviewed. This finding matters because yield is a key measurement of efficiency and production performance.

The Corporation agreed with all of our recommendations and indicated that it will act to address our concerns. However, because our audit work was completed in June 2016, I cannot comment on any measures that have been taken since then. The Committee may wish to ask the Corporation’s officials to clarify what measures have been taken in response to our recommendations.

Mr. Chair, this concludes my opening remarks. We would be pleased to answer any questions the Committee may have. Thank you.