What we examined (see Focus of the audit)

The Great Lakes Pilotage Authority (the Corporation) is a federal Crown corporation established in 1972. It reports to Parliament through the Minister of Transport and is one of four pilotage authorities established under the Pilotage Act.

The Corporation’s mandate is to establish, operate, maintain, and administer in the interest of safety an efficient pilotage service within the Great Lakes region. The Pilotage Act grants a monopoly to the Corporation on pilotage services within all Canadian waters in the province of Quebec south of the northern entrance to St. Lambert Lock, as well as within all Canadian waters in and around the provinces of Ontario and Manitoba.

Our objective for this audit was to determine whether the systems and practices we selected for examination at the Great Lakes 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 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 Great Lakes Pilotage Authority’s Board oversight and appointments, and in its process for monitoring the transits of Canadian vessels, but there was reasonable assurance there were no significant deficiencies in the other systems and practices that we examined. We concluded that, except for these significant deficiencies, the Corporation maintained its 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 about…

Corporate management practices

Overall, we found significant deficiencies in corporate management practices. The Board of Directors (the Board) oversight of the Corporation was not sufficient because the Board did not properly monitor the Chief Executive Officer’s travel and hospitality expenses, did not receive consistent and complete information on the implementation of some risk mitigation strategies, and did not ensure that the Corporation conducted internal audits. We also found delays in the appointment of Board members, which resulted in a significant deficiency that was out of the Corporation’s control.

These findings matter because without complete information from management, the Board lacked support for its decision making. Without internal audits, the Corporation was unable to provide to the Board an objective view of corporate activities. And a possible break in the continuity of Board membership could lead to a loss of corporate memory and to ineffective Board oversight.

• There were significant deficiencies in Board of Directors oversight and appointments

  Recommendation. The Corporation should adopt a consistent approach for declaring conflicts of interest and ensure that it properly documents the actions taken to manage these conflicts.

  Recommendation. The Corporation should ensure that the Audit Committee has the necessary information and supporting analysis to approve and perform its oversight role on the Chief Executive Officer’s travel, hospitality, conference, and event expenses.

  Recommendation. The Corporation should update its directive on travel and hospitality expenditures to address the concern raised related to spousal expenses and should strengthen its control and documentation procedures for the management of travel and hospitality expenditures.

  Recommendation. The Corporation should comply with the requirements of the Financial Administration Act to conduct internal audits.

  Recommendation. The Corporation should continue to engage with the Minister of Transport on the need for sufficient and timely appointments to the Board, continue to provide the Minister with profiles of potential candidates, and reinforce the need for staggered terms of office.

  Recommendation. The Corporation should report to the Board on the implementation of all mitigation strategies associated with the Corporation’s identified corporate and operational risks.

Management of pilotage services

Overall, we found a significant deficiency in the Corporation’s monitoring of the transits of Canadian ships subject to compulsory pilotage in the Great Lakes region, because it could not justify whether the monitoring it performed was effective to mitigate the safety risks. We also found weaknesses in the management of pilotage services. The Corporation did not regularly review the compulsory pilotage areas and ship classes subject to compulsory pilotage, it was not up to date in the monitoring of certificate holders, and it did not fully manage the performance of pilots according to its directive on pilot quality assurance.

These findings matter because they affect the Corporation’s ability to deliver on its mandate, which includes ensuring the safe passage of ships subject to compulsory pilotage in areas under the Corporation’s responsibility in order to reduce the risk of marine incidents and environmental damage.

• There was a significant deficiency in the Corporation’s monitoring of the transits of Canadian ships subject to compulsory pilotage

  Recommendation. The Corporation should conduct and document every five years reviews of the compulsory pilotage areas under its responsibility. The Corporation should also conduct and document periodic reviews of ships that should or should not be subject to compulsory pilotage.

  Recommendation. The Corporation should continue to perform monitoring on an ongoing basis to ensure that certificate holders still meet the requirements of the Great Lakes Pilotage Regulations.

  Recommendation. The Corporation should ensure that its monitoring frequency and coverage are sufficient and supported by the number of transits of Canadian vessels. It should also document the justifications for its decisions.

  Recommendation. The Corporation should ensure that the performance management of pilots is performed according to its directive on pilot quality assurance.

Entity Responses to Recommendations

Great Lakes 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 Transportation
Entities	Great Lakes Pilotage Authority
Completion date	15 November 2017
Tabling date	18 January 2018

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