What we examined (see Focus of the audit)

The National Capital Commission is a federal Crown corporation created in 1959. It reports to Parliament through the Minister of Canadian Heritage. According to its enabling legislation, the National Capital Act, the Corporation’s mandate is to help develop, conserve, and improve the National Capital Region in keeping with its national significance as the seat of the Government of Canada. The Corporation owns and manages land totalling more than 500 square kilometres and more than 1,700 properties, including the official residences of Canada.

Our objective for this audit was to determine whether the systems and practices we selected for examination at the National Capital Commission 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, with the exception of the significant deficiency we found in asset maintenance, there were no significant deficiencies in the National Capital Commission’s systems and practices that we examined for corporate management and the management of National Capital Region operations. We concluded that the Corporation has 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.

What we found

Corporate management practices

Overall, we found that the Corporation had good corporate management practices for governance, strategic planning, and performance measurement and reporting. However, there were weaknesses in its risk management practices. Specifically, the Corporation’s management and its Board of Directors did not receive comprehensive risk information for decision making. In addition, the Board and management did not clearly describe in the annual corporate plan the risk that it might not have sufficient resources to restore, maintain, and preserve its assets. This plan is key to informing the government of the Corporation’s issues.

These findings matter because the Corporation relies on sound management practices to operate efficiently and effectively. Comprehensive risk information supports decision making by the Corporation’s Board of Directors and the government. The government, Corporation management, and Board need to receive comprehensive information on the risks the Corporation faces in order to ensure that strategies are implemented to mitigate those risks.

• The Corporation had good corporate management practices, but weaknesses in risk management

  Recommendation. The Corporation should establish and approve a comprehensive enterprise risk management framework that sets risk tolerances, assesses strategic and operational risks through a consistent and integrated process, and provides comprehensive risk information for decision making.

  Recommendation. The Corporation should develop a full range of options to address its strategic risk related to asset maintenance, based on a complete analysis of the resources needed to restore and maintain its assets. The Corporation should work with appropriate government entities, through the corporate planning process and other means, so that steps are taken to address this strategic risk.

Management of National Capital Region operations

Overall, we found a significant deficiency in the Corporation’s asset maintenance. More than one quarter of its assets were in fair, poor, or critical condition, and there was an estimated shortfall in the resources required to restore them and maintain all of its assets. This would put the Corporation at risk of not safeguarding its assets and of not meeting its mandate. However, we found that the Corporation had good systems and practices in the other operational areas. The Corporation developed long-term plans for the National Capital Region, managed capital projects required to support the achievement of these plans, and completed regular assessments on the condition of its assets. The Corporation also had good systems and practices to complete its business process transformation, which included improving its management information system.

This finding matters because without adequate resources, the Corporation might not be able to meet an important part of its mandate, which is to maintain and preserve its assets and historic places in the National Capital Region. It might also not be able to meet its obligation under the Financial Administration Act to safeguard its assets.

• There was a significant deficiency in asset maintenance, although the Corporation had good management practices in its operations

  Recommendation. The Corporation should develop a full range of options to address its strategic risk related to asset maintenance, based on a complete analysis of the resources needed to restore and maintain its assets. The Corporation should work with appropriate government entities, through the corporate planning process and other means, so that steps are taken to address this strategic risk.

Entity Responses to Recommendations

The National Capital Commission 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	National Capital Commission
Completion date	29 March 2017
Tabling date	19 June 2017

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