Report of the Auditor General of Canada to the Board of Directors of the Atlantic Pilotage Authority—Special Examination Report—2016

Opening Statement to the Standing Committee on Public Accounts

Report of the Auditor General of Canada to the Board of Directors of the Atlantic Pilotage Authority—Special Examination Report—2016

(Atlantic Pilotage Authority—Special Examination Report—2016)

29 November 2016

Clyde MacLellan, FCPA, FCA
Assistant Auditor General

Thank you, Mr. Chair, for this opportunity to present the results of our special examination of the Atlantic Pilotage Authority. Joining me at the table is Heather McManaman, the Principal responsible for the audit.

A special examination of a Crown corporation is a type of performance audit. Specifically, a special examination seeks to determine whether the Crown corporation’s systems and practices provide reasonable assurance that its assets are safeguarded and controlled, its resources are managed economically and efficiently, and its operations are carried out effectively.

Our examination covered the period from October 2015 to March 2016.

The Atlantic Pilotage Authority is a federal Crown corporation whose mandate is to establish, operate, maintain, and administer in the interests of safety an efficient pilotage service within designated regions.

In our examination of the Corporation, we identified significant deficiencies in both the corporate management practices and the management of pilotage services. As a result of the pervasiveness of the significant deficiencies, we concluded that the Corporation had not maintained the systems and practices in a manner that provided 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.

Although its history includes few safety incidents, the Corporation needs to formalize and fully implement systems and practices that would demonstrate that it has been diligent in maintaining its pilotage operations. Doing so would minimize the Corporation’s risk of compromising its safety record in the future.

Regarding the specific significant deficiencies reported, we found that the Board of Directors, despite having strong competencies, had not set strategic direction for the Corporation, nor had it reviewed its mission, vision, or strategic objectives since 2003.

For example, the Corporation’s strategic direction did not include a long-term financial plan to ensure its financial self-sufficiency. The Corporation reacted to its operating losses in three of the past four years by implementing a surcharge on tariffs. Setting an effective strategic direction is important in order to articulate where an organization is going, what actions are needed to make progress, and how the organization will measure success. Without a strategic direction, management cannot develop and execute plans proactively.

We also found significant deficiencies in the recruitment, staffing, and performance management of pilots and pilot boat crews. For example, the Corporation used the services of entrepreneurial pilots without documented contracts specifying terms and conditions. The Corporation had not documented that the skills required of pilots and pilot boat crews were up to date. Also, in some instances, the Corporation failed to carry out performance reviews or lacked complete documentation of the reviews.

These findings matter because strong systems and practices in the areas of recruitment, staffing, and performance management are necessary for the delivery of the Corporation’s mandate, which includes the prevention of possible harm to pilots, users, and the environment.

Finally, our report identified room for improvement in some other areas. In particular, the Corporation needs to implement a cyclical review of the designation of every compulsory pilotage area under its responsibility. Cyclical reviews would take into consideration changes in technology, ship standards, and traffic patterns. In addition, the Corporation needs to perform annual inspections on all pilot boats that it uses to provide pilotage services.

The Corporation has agreed with all of our recommendations and has indicated that it would act quickly to address our concerns. However, because our audit work was completed in March 2016, I cannot comment on any measures that have been taken since then. The Committee may wish to ask the Corporation’s officials to clarify what measures have been taken in response to our recommendations.

Mr. Chair, this concludes my opening remarks. We would be pleased to answer any questions the Committee may have. Thank you.