VIA Rail Canada Inc.—Special Examination Report—2016
Audit at a Glance Special Examination Report—VIA Rail Canada Inc.
What we examined (see Focus of the audit)
This audit examined whether the systems and practices we selected for examination at VIA Rail Canada Inc. were providing it with reasonable assurance that its assets were safeguarded and controlled, its resources were managed economically and efficiently, and its operations were carried out effectively. We selected systems and practices based on our assessment of risks in the following areas:
- corporate governance;
- strategic planning, risk management, and performance measurement and reporting;
- operations; and
- capital investment program management.
What we concluded
We concluded that, based on the criteria established, there is reasonable assurance that during the period covered by the examination there were no significant deficiencies in VIA Rail Canada Inc.’s systems and practices that we selected for examination, except for the significant deficiency in governance as described in paragraphs 23 to 27. The systems and practices in all other areas we examined were maintained in a manner that provides VIA Rail Canada Inc. with reasonable assurance that its assets are safeguarded and controlled, its resources are managed economically and efficiently, and its operations are carried out effectively.
What we found
Corporate governance
Overall, we found that there was a significant deficiency in the Corporation’s governance, despite the good practices identified in this area. We found that VIA had made efforts to define a long-term strategic direction. However, despite its efforts, the Corporation still had no long-term plan or direction approved by the federal government. For a number of years, VIA has received from the government only short-term approval of its funding and five-year corporate plan, and often late in the Corporation’s fiscal year. In this context, VIA could not fulfill its mandate as economically, efficiently, and effectively as desired. The significant deficiency could also compromise the Corporation’s medium- and long-term viability.
This finding is important because, in the absence of enabling legislation, VIA’s corporate plan, once approved, is the main tool the Corporation has to clarify its mandate; define its strategic direction; establish its objectives; allocate its resources in the short, medium, and long term; and carry out its operations economically, efficiently, and effectively, based on the government’s priorities.
-
Recommendation. VIA Rail Canada Inc., in cooperation with government officials, should review its existing governance systems and practices to allow it to define, obtain approval of, and implement a long-term strategic direction in a timely manner so that the Corporation is able to fulfill its mandate economically, efficiently, and effectively.
Recommendation. VIA Rail Canada Inc.’s management, together with the Board of Directors, should regularly review and define the nature, quantity, and relevance of the information to be provided to Board members in a timely manner to properly assess risks and to support decision making.
Strategic planning, risk management, and performance measurement and reporting
Overall, we found that VIA had systems and practices in place that clearly defined its strategic direction and its objectives. It also had the key elements of a risk management framework in place as well as a performance measurement process that allowed the Corporation to follow up on its operations and adequately communicate its results.
This finding is important because establishing a strategic direction with clear and realistic objectives allows the Corporation to optimize the allocation of its resources in the short, medium, and long term so that it is able to fulfill its mandate. An integrated risk management framework allows the Corporation to get consolidated information on the risks inherent in its operations and on practices and controls that can mitigate these risks. Furthermore, performance measurement allows VIA to follow up on operations and objectives, rectify business strategies in a timely manner, facilitate decision making, and report on results obtained.
-
Recommendation. We made no recommendation in this area of examination.
Operations
Overall, we found that VIA had operating procedures and systems and practices allowing it to meet the needs of its customers, mitigate safety risks, and ensure the reliability of its operations, the safeguarding and control of its assets, and the quality of its services. However, VIA did not succeed in increasing the frequency of departures of some of its trains as expected and had difficulty maintaining on-time performance, which has worsened significantly since 2010, thereby compromising the achievement of the Corporation’s revenue- and ridership-increasing objectives. In addition, improvements could be made to better integrate fleet management and profitability analysis mechanisms into the revenue management system. We also found that VIA needed to improve the documentation of its Safety Management System and that it did not yet have in place all of the necessary mechanisms to measure the effectiveness of the system.
This finding is important because VIA needs to have efficient operating systems and practices in order to ensure the safety of staff, passengers, and the public, as well as compliance with legislation and regulations; and to enable business continuity as well as equipment access and reliability.
-
The Corporation had adequate operating procedures, but some aspects needed improvement
Recommendation. VIA Rail Canada Inc. should finish upgrading its Safety Management System and measure its effectiveness. VIA should also finish integrating this system into the corporate risk management system to ensure that safety risks are maintained at an acceptable level.
Recommendation. VIA Rail Canada Inc. should improve the documentation of its Safety Management System, including information supporting actions and decisions related to the safety of tracks owned by other railway companies.
Recommendation. VIA Rail Canada Inc. should finish analyzing all of its major information technology systems so that it can identify risks and vulnerabilities and determine actions to be taken to mitigate them.
Recommendation. VIA Rail Canada Inc. should, together with railway track-owning railway companies, ensure that it has mechanisms in place making it possible to maintain the on-time performance of its trains.
Recommendation. VIA Rail Canada Inc. should integrate profitability analysis and rolling stock fleet management mechanisms into its revenue management system to optimize ridership and revenues.
Capital investment program management
Overall, we found that project management systems and practices had not adequately supported the implementation of certain projects under the Corporation’s capital investment program. However, we noted that VIA had recently made or planned some improvements in this regard in order to address the main weaknesses.
This finding is important because VIA is regularly required to commit large amounts of funding to capital projects in order to meet its service reliability and safety objectives. In addition, implementing such projects requires the Corporation to have systems and practices in place that allow for careful management and coordinated efforts and that assist in securing appropriate resources. This finding is all the more significant because, for a number of years, VIA has been unable to obtain the expected results.
-
Recommendation. VIA Rail Canada Inc. should continue implementing corrective measures concerning its project management systems and practices in order to ensure that, for its future capital investments, it is able to reliably estimate costs, risks, and expected results, as well as manage projects within established budgets and timelines.
Recommendations
The audited entity agrees with our recommendations, and has responded (see List of Recommendations).
Related Information
Report of the | Auditor General of Canada |
---|---|
Type of product | Special Examination |
Topics | |
Audited entities | |
Completion date | 4 March 2016 |
Tabling date | 2 May 2016 |
Related audits |
For more information
Media Relations
Tel.: 1-888-761-5953
E-mail: infomedia@oag-bvg.gc.ca
Twitter: OAG_BVG