Audit at a Glance—Chapter 6—Transfer Payment Programs—Canadian Northern Economic Development Agency

Audit at a Glance

Chapter 6—Transfer Payment Programs—Canadian Northern Economic Development Agency

What we examined (see Focus of the audit)

Our audit examined whether the Canadian Northern Economic Development Agency manages and delivers selected economic development transfer payment programs in accordance with key requirements of the Policy on Transfer Payments. We examined the agreements the Agency has with recipients of program funds to determine how well agreements are administered. We also examined the management framework used by the Agency to manage its transfer payment programs. Finally, we examined whether the Agency has established the organization and aligned its resources to carry out its overall mandate.

What we found

The Agency’s assessment of project eligibility is adequate for two of three programs (see paragraphs 6.7-6.20)

We found that the Agency adequately assessed project eligibility in two of the three programs we examined—the Northern Adult Basic Education Program (NABEP) and Targeted Investment Program (TIP). However, the Agency did not adequately assess project eligibility in the Community Economic Development Program (CEDP).

This finding is important because complete assessments of project eligibility are important for all projects to ensure that only projects consistent with the overall objectives of the programs receive funding, and to ensure compliance with the Policy on Transfer Payments.

Recommendation. The Canadian Northern Economic Development Agency should ensure that complete assessments of eligibility for assistance under its economic development programs are completed and documented as required by the Policy on Transfer Payments. In cases where applications are incomplete, the Agency should work with applicants to ensure that they provide all information required to complete assessments.

The Agency’s administration of contribution agreements is weak (see paragraphs 6.21-6.26)

We found that for the agreements in our selection, it took, on average, over nine months after an application was received for a contribution agreement to be signed (completing the initial assessment took the longest time). As a result, some of these agreements were signed late in the fiscal year they covered and some recipients had only a short period of time to spend funds.

This finding is important because recipients have told the Agency that they do not consider the turnaround time for the application process to be appropriate. The Agency has not yet established and communicated service standards to its clients, a requirement under the Policy on Transfer Payments.

We also found inconsistencies in 38 of 42 contribution agreements we examined, including dates specified for recipient reports to be submitted and payments to be made to recipients in advance of the dates the agreements were signed. We also found contradictory statements in the agreements about the basis on which payments are to be made.

This finding is important because these inconsistencies have the potential to reduce the credibility of the Agency and the reputation of its programs.

Recommendation. The Canadian Northern Economic Development Agency should formally review the processes in place for the review and approval of projects so that decisions on funding to recipients are made in a timely manner.

Recommendation. The Canadian Northern Economic Development Agency should review its quality assurance processes to ensure that, before contribution agreements are signed, they do not contain inconsistencies.

The Agency uses risk assessments, but has not yet defined appropriate monitoring and reporting requirements (see paragraphs 6.27-6.30)

This finding is important because Agency officials are responsible for ensuring that the monitoring and reporting requirements set out in contribution agreements reflect the level of funding and the risk profile of the recipient and project.

Recommendation. The Canadian Northern Economic Development Agency should document its recipient and project risk assessments. It should also define appropriate levels of monitoring and reporting to be specified in contribution agreements, proportionate to recipient and project risks.

The Agency does not adequately monitor compliance with contribution agreements (see paragraphs 6.31-6.43)

The Agency is responsible for ensuring that recipients comply with the obligations set out in contribution agreements. This is important so that the Agency knows whether recipients are carrying out activities in accordance with requirements set out in agreements. If monitoring shows that this is not the case, the Agency can then intervene.

Recommendation. The Canadian Northern Economic Development Agency should review recipient reports and follow up on cases where information is incomplete or does not support activities specified in the contribution agreements. It should also document follow-up and monitoring activities to ensure that agreements are being monitored in accordance with the requirements of the Policy on Transfer Payments.

The Agency has not measured or reported on the achievement of program objectives (see paragraphs 6.44-6.48)

This finding is important because the Policy on Transfer Payments requires departments to establish performance measurement strategies for their programs, and to ensure there is adequate and relevant information to support program management, program evaluation, and external reporting.

Recommendation. The Canadian Northern Economic Development Agency should fully implement performance measurement strategies for its economic development programs. The Agency should incorporate performance information requirements set out in the strategies into contribution agreements and use this information to report on program performance.

The Agency is implementing a management framework for transfer payment programs (see paragraphs 6.49-6.57)

This finding is important because the full implementation of this framework may help the Agency improve its management of transfer payment programs.

Recommendation. The Canadian Northern Economic Development Agency should finalize implementation of its Management Control Framework for Grants and Contributions, and follow through on its commitments to update the manuals and tools used to manage contribution agreements.

The Agency has not been able to fill some positions at its Iqaluit headquarters (see paragraphs 6.58-6.65)

This finding is important because when the Canadian Northern Economic Development Agency was created, the government determined that the headquarters would be located in the North, as part of the federal government’s Northern Strategy. Under the Nunavut Land Claims Agreement, organizations must establish and maintain the employment of Inuit at a representative level.

Recommendation. The Canadian Northern Economic Development Agency should update its human resources plan and establish an Inuit employment plan as required under the Nunavut Land Claims Agreement. The Agency should monitor implementation of these plans and adjust them as required.

Key corporate functions and senior management positions are in the Ottawa liaison office (see paragraphs 6.66-6.68)

This finding is important because the Agency planned for just under 10 percent of employees to be located in the liaison office in Ottawa. As of August 2013, there were more employees located in the Ottawa liaison office (just under 35 percent) than at headquarters in Iqaluit (30 percent).

Recommendation. The Canadian Northern Economic Development Agency should review its staff complement with a view to fulfilling its mandate of having an organization based in the North.

The Agency’s office accommodation framework is incomplete (see paragraphs 6.69-6.72)

We found that the Agency has a draft Office Accommodation Framework, dated 2011—two years after the Agency was created. As well, it has not implemented and updated the framework to support timely, informed real property management decisions.

This finding is important because the Treasury Board Policy on Management of Real Property states that deputy heads are responsible for ensuring that an appropriate real property management framework is in place that supports timely, informed real property management decisions.

Recommendation. The Canadian Northern Economic Development Agency should update its Office Accommodation Framework taking into consideration lessons learned since its establishment.

The Agency has started to harmonize economic development programs (see paragraphs 6.73-6.76)

This finding is important because the Policy on Transfer Payments requires that officials should ensure, when appropriate, the harmonization of transfer payment programs within a department. In our 2010 audit on Sustaining Development in the Northwest Territories, we recommended that the Agency clarify the objectives of its economic development programs and develop a strategic approach to delivering them that included the identification of needs and gaps, and clear, coordinated objectives.

Recommendation. The Canadian Northern Economic Development Agency should finalize harmonization of its economic development transfer payment programs as soon as possible so that the objectives are clear and accountability is clarified.

Response

The Canadian Northern Economic Development Agency had agreed with our recommendations, and has responded (see List of recommendations).

Why this audit is important

While Canada’s North has economic potential, there are challenges to realizing northern economic development opportunities. Territorial governments, communities, Aboriginal organizations, and the private sector all face human resources and organizational challenges that affect their ability to participate in economic development. Finally, socio-economic conditions—low levels of educational attainment, lack of housing, and limited health and social services—have an impact on residents’ ability to participate in the economy.

The federal government views strong, ongoing federal investments in infrastructure, knowledge, and capacity building as a means to address northern challenges and allow the territories to develop economically. The 2008 Speech from the Throne committed to establishing Canada’s first stand-alone agency dedicated to northern economic development, a key component under the government’s Northern Strategy. In January 2009, the Canadian Northern Economic Development Agency (the Agency) was announced in the Federal Budget. The Agency was formally created in August 2009. The government announced that its headquarters would be located in Iqaluit.

Details of the audit

For more information, please click here.