What we examined (see Focus of the audit)

The Pacific Pilotage Authority is a federal Crown corporation established in 1972 under the Pilotage Act. It is a Crown corporation listed in Schedule III, Part I, of the Financial Administration Act (FAA). It reports to Parliament through the Minister of Transport.

The Corporation’s mandate is to establish, operate, maintain, and administer in the interests of safety an efficient pilotage service within the regions set out for the Corporation, on a basis of financial self-sufficiency. The Pilotage Act grants a monopoly to the Corporation to provide pilotage services in the coastal waters of British Columbia extending approximately two nautical miles from every major point of land, and along the Fraser River.

Our objective for this audit was to determine whether the systems and practices we selected for examination at the Pacific Pilotage Authority 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.

Based on our assessment of risks in the area of corporate management practices, we selected the following systems and practices for examination:

• corporate governance;
• strategic planning, risk management, and performance reporting; and
• human resource management.

Based on our assessment of risks in the area of management of pilotage services, we selected the following systems and practices for examination:

• management of pilots, and
• management of pilotage operations.

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 the Pacific Pilotage Authority’s systems and practices that we selected for examination. The Corporation has maintained these systems and practices in a manner that provides it 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 management practices

Overall, we found that the Corporation had in place elements of good corporate management practices for governance, strategic planning, risk management, performance reporting, and human resource management. However, improvements were needed in four areas:

• Board members’ processes for reviewing and confirming their independence in fulfilling their responsibilities,
• documentation of resource needs for strategic planning,
• risk assessment of the service delivery model, and
• documentation of compensation guidelines for management and administrative staff.

This is important because corporate management practices work together to help ensure that the Corporation can fulfill its mandate and meet the applicable requirements outlined in the Financial Administration Act (FAA). Improvement in the first area is needed to promote compliance with conflict-of-interest measures set out in the FAA and the Conflict of Interest Act. Improvements in the remaining areas are needed to support allocation of the Corporation’s resources to high-priority strategic matters and to promote transparency and accountability.

• The Corporation had in place good corporate management practices but improvements were needed

  Recommendation. The Board should strengthen its independence practices by implementing conflict-of-interest processes and improving documentation of them. To ensure each director’s ongoing compliance with applicable requirements, the Board should adopt formal processes clarifying the circumstances and relationships that could lead to real, potential, or perceived conflicts of interest.

  Recommendation. The Corporation should estimate the resources needed to carry out actions in support of its strategic priorities, and should include those estimates in its management and Board reporting.

  Recommendation. The Corporation should identify, assess, and mitigate all of the risks it faces in fulfilling its mandate for safe, reliable, and efficient pilotage services through its contractual service provider.

  Recommendation. The Corporation should put in place guidelines that explain how performance appraisal results translate into annual increases in salary and performance pay for managers and   administrative staff.

Management of pilotage services

Overall, we found that the Corporation had in place elements of good management of pilotage services for the purpose of managing pilots and pilotage operations. However, improvements were needed in three areas:

• processes for pilot resource planning with respect to future requirements for pilotage services,
• completeness of pilot performance assessments, and
• performance of periodic reviews of the compulsory pilotage area under the Corporation’s control.

This is important because the Corporation is responsible for achieving its mandate, but its ability to do so depends largely on its contract and collaboration with a service provider, British Columbia Coast Pilots Ltd. (BCCP). The Corporation has a responsibility to ensure that it has the right processes in place for the delivery of pilotage services, at a reasonable cost and with competent pilots. In 1999, Transport Canada endorsed a recommendation made by the Canadian Transportation Agency in its report on outstanding pilotage issues. The Agency recommended a periodic review of compulsory pilotage areas, and the Corporation has a responsibility to ensure that it respects the recommendation. Improvements in these areas would help ensure that the Corporation can fulfill its mandate and related requirements.

• The Corporation had in place good management of pilotage services but improvements were needed

  Recommendation. The Corporation should work with British Columbia Coast Pilots Ltd. (BCCP) to develop ongoing processes that address both short- and long-term demand for pilotage services, at a reasonable cost.

  Recommendation. The Corporation should ensure it receives from British Columbia Coast Pilots Ltd. complete, reliable, and timely information on pilot performance. The Corporation should also assign a role and responsibility for reviewing pilots’ performance information, with the aim of ensuring proper oversight and follow-up actions as needed.

  Recommendation. The Corporation should conduct a review every five years of the compulsory pilotage area under its responsibility.

Entity Responses to Recommendations

Pacific Pilotage Authority 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	Crown Corporations Financial Management and Government Spending
Audited entities	Pacific Pilotage Authority
Completion date	10 February 2016
Tabling date	22 March 2016
Related audits	Chapter 7—Special Examinations of Crown Corporations—2008, 2009 Spring Report of the Auditor General of Canada

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