What we examined (see Focus of the audit)

The Freshwater Fish Marketing Corporation is a federal Crown corporation established in 1969 under the Freshwater Fish Marketing Act, for the purpose of marketing and trading in fish, fish products, and fish by-products in and outside Canada.

Our objective for this audit was to determine whether the systems and practices we selected for examination at the Freshwater Fish Marketing Corporation 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, as required by section 138 of the Financial Administration Act.

What we concluded

In our opinion, based on the criteria established, there were significant deficiencies in the Freshwater Fish Marketing Corporation’s systems and practices that we examined for corporate management and the management of operations. As a result of the pervasiveness of the significant deficiencies, we concluded that the Corporation had not maintained these systems and practices during the period covered by the audit in a manner that provided the reasonable assurance required under section 138 of the Financial Administration Act.

Subsequent event

On 21 December 2016, in accordance with Order-in-Council Privy CouncilPC 2016-1181, the Governor in Council, on the recommendation of the Minister of Fisheries and Oceans, terminated for cause the appointment of the President of the Freshwater Fish Marketing Corporation, following an independent investigation that was conducted into allegations and concerns raised in complaints about his conduct as President. He had agreed to go on administrative leave in March 2016.

Areas of concern

Overall, we found many weaknesses and significant deficiencies in the oversight and management of the Corporation, and in the way its operations were carried out. In several ways, the Board and management failed to meet their responsibilities for oversight and management of the Corporation, leaving it exposed to considerable risks in a complex and changing business environment.

The Board experienced high turnover and multiple vacant positions, both of which complicated oversight activities and decision making. The Board had not taken steps to ensure that the Corporation’s strategic plan was updated and to provide clearly defined strategic direction to management. Also, the Corporation had not updated its risks and risk-mitigation measures since 2014. Consequently, management did not have strategies in place to mitigate significant events affecting the Corporation.

On the management side, we found that management disregarded key controls. For example, the President created positions without job descriptions and filled positions without conducting competitive or merit-based processes—ignoring the Corporation’s recruitment and staffing practices that allow for equal employment opportunities.

The President also disregarded the Corporation’s Procurement and Purchasing Policy when the Corporation purchased $794,000 of equipment without carrying out proper business case analyses. Some of this equipment was not used in the plant because it did not meet the Corporation’s needs.

We also found that some plant workers had not taken compulsory health and safety training and that a hazard prevention program was not yet finalized. If these health and safety issues are not addressed, they could lead to more employee safety incidents and expose the Corporation to significant losses. Furthermore, we found that, despite the recommendations from our 2005 and 2010 audits, the Corporation’s targets and standards for yield, capacity, and labour efficiency had not been reviewed for years. Yield is a key measurement of efficiency and production performance.

The Corporation faced many external challenges in recent years. These challenges left it exposed to considerable risks, such as an unpredictable fish supply and the province of Manitoba’s notice of withdrawal from its agreement to participate in the Freshwater Fish Marketing Act. These challenges were compounded by the fact that the Corporation had no long-term strategic direction, which placed it in a reactive management mode. This greatly limited its ability to meet objectives, make long-term commitments, and make timely decisions about its future.

• The Board’s oversight of the Corporation was inadequate

• Important business practices and controls were lacking, or were disregarded by management

  Recommendation. In consultation with the Minister of Fisheries and Oceans, the Corporation should address its deficiencies in governance practices, including those in the areas of Board profiles and competencies, oversight, and potential or perceived conflicts of interest.

  Recommendation. The Corporation should update its risk register and its strategic direction and objectives, in consultation with government officials, to allow it to define, obtain approval of, and promptly implement a long-term strategic direction. In doing so, the Corporation should ensure that it has appropriate information for decision making.

  Recommendation. The Corporation should create clear operational and capital plans that detail how to achieve its strategic objectives for upcoming years, and effectively communicate them throughout the Corporation.

  Recommendation. The Corporation should review its policies and procedures to identify where updates are required or where gaps exist. It should ensure that its employees are trained on its policies and procedures, in accordance with their responsibilities. It should assess and monitor compliance with its policies and procedures.

Entity Responses to Recommendations

Freshwater Fish Marketing Corporation 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
Entities	Freshwater Fish Marketing Corporation
Completion date	21 February 2017
Tabling date	15 March 2017
Related audits	Chapter 7—Special Examinations of Crown Corporations—2010, 2011 June Status Report of the Auditor General of Canada

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