Introduction

Background

1. The Federal Bridge Corporation is a federal Crown corporation headquartered in Ottawa, Ontario. The corporation is responsible for the Canadian federal interests in 4 international bridges that connect Ontario to Michigan and New York in the United States (Exhibit 1):

• the Sault sainteSte. Marie International Bridge (Sault Ste. Marie)
• the Blue Water Bridge (Point Edward)
• the Thousand Islands International Bridge (Ivy Lea)
• the Seaway International Bridge (Cornwall)

2. The corporation’s business is the design, construction, acquisition, financing, maintenance, operation, management, development, repair, demolition, or reconstruction of bridges or other related structures, facilities, works, or properties that link the province of Ontario to the states of New York and Michigan in the United States. The corporation reports to Parliament through the Minister of Transport.

3. Unlike many federal Crown corporations, the corporation’s mandate is not defined in an act of Parliament. Its mandate, according to its government-approved corporate plan, is to provide the highest level of stewardship so that its international bridges and associated structures are safe and efficient for users.

4. The Federal Bridge Corporation was created under the Canada Business Corporations Act by amalgamating the legacy corporation (established in 1998) of the same name with 2 other bridge corporations, per the Economic Action Plan 2013 Act, numberNo. 2:

• the St. Mary’s River Bridge Company, on 27 January 2015, then a wholly owned subsidiary of the corporation that owned the Canadian interests in the Sault Ste. Marie International Bridge
• the Blue Water Bridge Authority, on 1 February 2015, another Crown corporation that owned the Canadian interests of the Blue Water Bridge

5. A planned amalgamation with the corporation’s remaining wholly owned subsidiary, The Seaway International Bridge Corporation, limitedLtd., awaits agreement by its United StatesUS partner, the Great Lakes SaintSt. Lawrence Seaway Development Corporation. The Thousand Islands International Bridge has been part of the original Federal Bridge Corporation’s portfolio since 1998.

6. The corporation owns the Canadian share of the 4 international bridges in its portfolio, including bridge plazas and related facilities. The corporation operates the Canadian side of the Blue Water Bridge (the US owner operates the US side), but it does not directly operate the other bridges.

7. For the other 3 international bridges in its portfolio, the corporation has entered into binational agreements with the US owners. These agreements date as far back as 1954. Under these agreements, the bridges are operated as single ventures, where neither the corporation nor the US owner has unilateral control. Each of the single ventures has a governance structure with representation from the Canadian and US interests. The corporation’s Chief Executive Officer is currently a representative on all 3 binational partnership governance structures.

8. The bridge operators of these 3 single ventures are as follows (Exhibit 2):

• The Seaway International Bridge Corporation, Ltd., a wholly owned subsidiary of the corporation, operates the Seaway International Bridge.
• The International Bridge Administration, a unit of the American partner, operates the Sault Ste. Marie International Bridge.
• The Thousand Islands Bridge Authority, the American partner, operates the Thousand Islands International Bridge.

9. The corporation is normally expected to generate enough revenue to cover its expenses, including repairs and most major capital projects. It receives federal funding occasionally—for example, for specific activities or for acquisitions of property and equipment.

10. With the onset of the coronavirus disease (COVID‑19) pandemic, the Canada–US border was closed on 21 March 2020 to non‑essential traffic. Consequently, all of the corporation’s international bridge crossings saw major traffic decreases (Exhibit 3). On 9 August 2021, Canada started easing border restrictions.

11. As a result of the border closing, the corporation’s revenues from tolls and leasing, which are largely based on sales from duty-free shops, decreased sharply during the pandemic and put the corporation’s financial self-sustainability at risk (Exhibit 4). In the 2020–21 fiscal year, the corporation obtained Canadian federal government funding totalling $5,729,000 in emergency COVID‑19 relief. It used $2,381,000 of this amount to cover the revenue shortfalls of the Seaway International Bridge and $3,348,000 to cover its portion of costs for the other 3 bridges in its portfolio.

12. The corporation has secured access of up to $18,497,000 in emergency COVID‑19 funding from the Canadian federal government for the 2021–22 fiscal year to support the continued operation of all 4 international bridge crossings. It has also entered into a new loan agreement, which will allow it to borrow up to $10 million to help meet its future cash-flow needs, if required. The corporation was able to maintain its Standard and Poor’sS&P Global credit rating at A+ (with a revised negative contextual outlook) as of the end of our examination period.

13. The corporation also continues to work with the federal government to address its concern over the financial sustainability of its subsidiary, The Seaway International Bridge Corporation, Ltd. This concern preceded the COVID‑19 pandemic. In its 2019–24 corporate plan, the corporation alerted the government that the ongoing issue related to the financial sustainability of the subsidiary had become high risk, given the significant increase in crossings for which the government had imposed toll exemptions. This increase threatened the subsidiary’s ability to generate enough revenue to cover its costs over the long term. The corporation has been working with the government to develop a mechanism to address these funding challenges.

14. The Financial Administration Act requires each parent Crown corporation to have a special examination carried out, for itself and its wholly owned subsidiaries, at least once every 10 years. The statutory deadline for completing and reporting this examination is 1 February 2025, 10 years after the creation of the newly amalgamated Federal Bridge Corporation.

15. The Jacques Cartier and Champlain Bridges Incorporated became a parent Crown corporation in 2014. Previously, it was a subsidiary of the corporation. Therefore, The Jacques Cartier and Champlain Bridges Incorporated is subject to its own special examination and is not included in the scope of this special examination.

Focus of the audit

16. Our objective for this audit was to determine whether the systems and practices we selected for examination at the Federal Bridge 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.

17. In addition, section 139 of the Financial Administration Act requires that we state an opinion, with respect to the criteria established, on whether there was reasonable assurance that there were no significant deficiencies in the systems and practices we examined. We define and report significant deficiencies when, in our opinion, the corporation could be prevented from having reasonable assurance that its assets are safeguarded and controlled, its resources are managed economically and efficiently, and its operations are carried out effectively.

18. On the basis of our risk assessment, we selected systems and practices in the following areas:

• Corporate management practices
• Management of bridge assets and bridge operations

The selected systems and practices, and the criteria used to assess them, are found in the exhibits throughout the report.

19. More details about the audit objective, scope, approach, and criteria are in About the Audit at the end of this report.

Findings, Recommendations, and Responses

Corporate management practices

The corporation had good corporate management practices, but improvements were needed in board oversight, performance measurement, and corporate risk management

20. We found that the corporation had good corporate management practices, but improvements were needed in several areas. Specifically, we found that gaps in reporting lessened board oversight, and we found that some of the targets and indicators needed for strong performance measurement were lacking. The corporation also had not incorporated environmental and sustainable development risks into its risk assessments and lacked some documentation in its risk register.

21. The analysis supporting this finding discusses the following topics:

• Corporate governance
• Strategic planning
• Corporate risk management

22. The corporation is governed by the Board of Directors consisting of 7 members, including the Chairperson and the Chief Executive Officer.

23. The Chief Executive Officer and the Chairperson are appointed by the Governor in Council^{Definition 1} for a term that the Governor in Council considers appropriate. Each board member is appointed by the Minister of Transport with the approval of the Governor in Council, for a term not exceeding 4 years. All board members are eligible for reappointment at the expiration of their terms. There was 1 expired term for a director on the board as of the end of our examination period. However, there were no vacancies, because this director would continue to serve as a member until a successor is appointed, as permitted under the Financial Administration Act.

24. The board is supported by a Finance and Audit Committee and a Governance, Policy and Human Resources Committee.

25. The corporation is subject to Part X of the Financial Administration Act, which includes requirements for it to submit an annual corporate plan, including an annual operating budget and an annual capital budget, for government approval.

26. Although the corporation had submitted its 2021–26 corporate plan on time, the plan had not yet been approved by the Treasury Board or tabled in Parliament by the end of our examination period.

27. Our recommendations in this area of examination appear at paragraphs 34, 38, 48, 49, 55, and 59.

28. Analysis. We found that the corporation had good corporate governance practices, but improvements were needed in board oversight. The board did not receive complete reporting on compliance with legislative authorities or on the results of conflict‑of‑interest processes. Also, the corporation had not formalized its information-sharing practices with all bridge operators in its portfolio (Exhibit 5).

29. Weaknesses—Board oversight. The corporation is subject to many federal and provincial laws and regulations, and the bridge operators in its portfolio may be subject to both Canadian and US federal and state laws and regulations. Furthermore, the binational agreements stipulate that bridge operators must comply with applicable laws and regulations. The board did receive reporting on the corporation’s compliance with some of these laws and regulations (including financial legislation and regulations under the International Bridges and Tunnels Act). However, it did not receive reporting on others, such as compliance with applicable environmental laws. Nor did it receive any information from the corporation about the bridge operators’ compliance with Canadian or US laws. Therefore, the board did not receive complete information to allow it to fully carry out its oversight.

30. As there have been high-profile instances of unethical behaviour in the infrastructure industry in recent years, disclosure of wrongdoing has become a focus for many public and private organizations connected to the industry, as a way of encouraging public trust. The board received an annual report from the corporation’s Senior Disclosure Officer on fraud and other wrongdoing, including a copy of the annual report filed with the Treasury Board Secretariat under the Public Servants Disclosure Protection Act.

31. However, the board did not receive information on the results of the corporation’s annual process for employee declarations on conflicts of interest. It also did not receive information from the corporation about the conflict‑of‑interest policies and processes put in place by the bridge operators.

32. The board needs complete reporting on the corporation’s compliance with applicable laws and regulations, and information on the results of conflict‑of‑interest processes. This would allow the board to address the risk that non‑compliance with legislative authorities could pose to the corporation’s ability to meet its mandate. It would also allow the corporation to address any risks posed by those influenced by outside interests.

33. This weakness matters because without complete reporting on compliance with legislative authorities and results of conflict‑of‑interest processes, the board cannot be sure that it is receiving the information it needs to oversee the corporation effectively. This could expose the corporation to regulatory and reputational risks.

34. Recommendation. The corporation should ensure that the board receives complete reporting on compliance with legislative authorities and results of conflict‑of‑interest processes, to support effective board oversight and decision making.

The corporation’s response. Agreed. The corporation’s Board of Directors currently receives compliance reporting on key authorities. The corporation has contractual relationships with bi‑national entities and bridge operators for the operation of specific international bridges that govern the nature of the relationship and the obligations of each party per applicable laws, diplomacy and governance considerations. These agreements are subject by the corporation to independent third-party audits per negotiated bi‑national agreements. Subject to these agreements, the corporation commits to conducting a review of the reporting to the Board of Directors on applicable legislation relevant to the corporation within the 2022–23 to 2026–27 planning period. In its oversight of conflict of interest, the corporation has formal policies, internal controls and targeted activities in place to protect its interests. The corporation has established a reporting by exception framework through the Chief Executive Officer to the Board of Directors. The corporation commits to reviewing its conflict of interest reporting practices within the 2022–23 fiscal year, with an aim to continuous improvement.

35. We also found that the corporation received information from the 3 bridge operators in its binational partnerships about the administration and management of the binational agreements informally through professional working relationships. Furthermore, we found that the corporation formally documented, in its corporate policies, some but not all of the information it needed from the bridge operators. For example, it documented the need for financial information, as well as for bridge inspection and maintenance reporting. However, it had not documented some of the other information it needed from bridge operators, nor had it formally communicated its information needs to bridge operators.

36. In 2021, the corporation and the Michigan Department of Transportation exchanged letters to document their commitment to continue sharing key information with each other (such as master plans, inspection reports, and advance communication of toll‑rate changes) for the Blue Water Bridge. However, there was no similar exchange of information with the other 3 bridge operators to elaborate and formalize their information-sharing practices beyond what was stipulated in the binational agreements.

37. This weakness matters because the corporation, including its board of directors, requires large amounts of information from bridge operators to fulfill its oversight role over its bridges and associated structures so that they are safe and efficient for users. A formal communication of information needs from bridge operators would facilitate the coordination of complete, timely, and regular information sharing.

38. Recommendation. The corporation should formalize its information requirements with the bridge operators in its 3 binational bridge partnerships.

The corporation’s response. Agreed. The corporation agrees that there is benefit to an increased formalization of detailed information requirements that support the agreements in place at its crossings. The corporation will review all information exchanges linked to each agreement in place for enhanced documentation by the end of the 2023–24 fiscal year.

39. Analysis. We found weaknesses in performance measurement, monitoring, and reporting. In particular, the corporation had not established performance indicators that directly addressed its mandate that its international bridges and associated structures be safe and efficient for users. It also did not define targets for the performance indicators related to its strategic objectives (Exhibit 6).

40. Weaknesses—Performance measurement and reporting. The corporation publicly reported on key achievements related to its strategic objectives in its 2020–21 annual report. However, we found that it did not establish any clear targets for the performance indicators related to those objectives. So, the corporation could not objectively measure progress against its strategic objectives.

41. Some strategic objectives had performance indicators that were based on the implementation or completion of the objective itself but lacked targets such as milestones or timelines. Here are two examples:

• The strategic objective of “real-time predictive traffic analysis” had an indicator of “deployment of consolidated data aggregation and analysis solution.”
• The strategic objective of “technology master plan” had an indicator of “plan completed and execution progress.”

42. The status reported for each of these strategic objectives in the 2020–21 annual report was “progressing.” However, without specific targets, the corporation could not use the indicators to determine whether there were any performance shortfalls or performance improvements over time.

43. Other strategic objectives had performance indicators that were based on financial or other measures, but specific targets were not set. Here are two examples:

• The strategic objective of “toll rate strategies” had an indicator of “traffic trends and market shares.”
• The strategic objective of “maintain or increase customer amenities and service” had an indicator of “increase in lease and other diversified non‑toll revenues.”

44. The reported status for each of these strategic objectives in the 2020–21 annual report was “not achieved.” However, because the performance indicators did not include specific targets, there was no meaningful way to assess how far these strategic objectives were from being met.

45. We also found that while the corporation established performance indicators for its strategic objectives, it did not establish any that directly addressed its mandate that its international bridges and associated structures be safe and efficient for users. We recognize that many of the corporation’s strategic objectives, as well as its day‑to‑day operations, support its mandate. However, establishing and tracking key performance indicators and targets for safety and efficiency is important so that a signal can be sent to management or the board when an organizational response may be needed.

46. Although the corporation is best equipped to identify these performance indicators and targets, we have provided an example. A performance indicator related to safety could be the number of urgent items identified through bridge inspections and the length of time to address them. If the corporation established a target for this indicator, any increase in the number of items or the length of time outstanding would prompt management to consider whether additional actions and monitoring were needed.

47. These weaknesses matter because without measurable, specific, and time-bound targets for its performance indicators, the corporation cannot meaningfully assess or report on progress. Consequently, it might not consider in a timely manner whether additional actions and monitoring are needed for it to achieve its strategic objectives. Furthermore, establishing performance indicators directly related to safety and efficiency—which are public policy objectives and part of the corporation’s mandate—would better allow the corporation to demonstrate its performance in these areas and improve its accountability.

48. Recommendation. The corporation should define specific targets and time-bound milestones for the performance indicators related to its strategic objectives.

The corporation’s response. Agreed. The corporation resolves to review its performance targets and objectives methodology to enhance information for users and include these revisions in the corporate plan for 2023–24 to 2027–28 as well as in the 2023–24 annual report.

49. Recommendation. The corporation should establish performance indicators and targets that directly address its mandate that its international bridges and associated structures be safe and efficient for users.

The corporation’s response. Agreed. The corporation agrees that performance indicators and targets are important measurements of its achievement of the mandate and resolves to review its methodology to enhance information to users and include these revisions in the corporate plan for 2023–24 to 2027–28 as well as in the 2023–24 annual report.

50. Analysis. We found weaknesses in risk management. Specifically, the corporation did not integrate environmental and sustainable development risks into its corporate risk assessment processes. Nor did it document the mitigation measures for some of its risks (Exhibit 7).

51. Weakness—Risk identification and assessment. The corporation completed a study in March 2021 on the effects and risks of climate change on its infrastructure and on the organization as a whole. However, we found that it had not integrated these environmental and sustainable development risks into its risk management processes. For example, the climate study considered the long-term effects of extreme heat, high winds, and freezing rain accumulation. Over time, these factors could affect several corporate-risk areas: bridge safety (asset integrity), bridge safety (human element), workforce management, technological systems, and financial sustainability. Once the potential effects of these factors are understood, the corporation should adjust its risk management processes to integrate these risks.

52. The corporation has a mandate to provide safe and efficient infrastructure, which typically includes considering environmental sustainability. Moreover, recently, the prevalence of environmental, social, and governance-related risks, also referred to as sustainability risks, has increased rapidly. Accordingly, the government and the global community are placing increasing importance on environmental, social, and governance-related risks. For example, in 2015, Canada and other United Nations member states adopted the 2030 Agenda for Sustainable Development, a vision for partnership, peace, and prosperity for all people and the planet. The 2030 Agenda outlined 17 Sustainable Development Goals and corresponding targets that aimed to address current and future social, economic, and environmental challenges. At the national level, the government reiterated its commitment to implementing these goals.

53. Of particular importance to the corporation’s operations is Target 9.1, to “develop quality, reliable, sustainable and resilient infrastructure, including regional and transborder infrastructure, to support economic development and human well-being, with a focus on affordable and equitable access for all.” Sustainable infrastructure systems are those that are planned, designed, constructed, operated, and decommissioned in a way that ensures economic and financial, social, environmental, and institutional sustainability over the infrastructure lifecycle.

54. This weakness matters because the federal government recently established formal expectations for federal departments and agencies to integrate the Sustainable Development Goals into their operations. We recognize that similar expectations were not established for Crown corporations. However, in our view, the Sustainable Development Goals offer a framework for organizations, including Crown corporations, to identify and contribute to social, economic, and environmental initiatives.

55. Recommendation. The corporation should integrate environmental and sustainable development risks into its risk management processes in order to identify, mitigate, monitor, and report on its environmental and sustainable development risks.

The corporation’s response. Agreed. The corporation has long‐established and responsible environmental and socially responsible practices and processes embedded into all of its bridge operations and major capital projects. The corporation’s Board of Directors began training on environment, social, and governance frameworks in 2018, and most recently in 2020–21, a comprehensive climate change study across its entire portfolio was performed. In October 2021, the corporation has initiated a strategic process to integrate all sources of current information and activities into a formal environmental, social, and governance framework. Once the modern framework is in place, the corporation will reassess its risks and mitigation measures as part of its enterprise risk management program. A target date of the end of fiscal 2023–24 is set for completion of all related documentation.

56. Weakness—Risk mitigation. We found that the corporation did not document risk mitigation measures in its risk register for risks that it had assessed as having effective risk management in place.

57. The corporation assessed several of its risk areas—for example, workforce management, competition, partnerships and stakeholders, public perception, and bridge safety (asset integrity)—as constituting low residual risk, meaning that these risks had effective risk management in place. However, it did not document in its risk register the mitigation measures that it had implemented to derive this low residual risk rating. For example, it was unclear from the risk register which actions the corporation took that reduced bridge safety risk from a higher inherent risk rating to a low residual risk rating. While the low residual risk rating was likely due in part to annual bridge inspections, the corporation could have implemented other mitigation measures to address this risk that were not documented in its risk register.

58. This weakness matters because documenting risk mitigation measures provides management with baseline information to identify changes in mitigation measures, including the need to make decisions about resource allocation. Documenting these measures also allows management to regularly assess the effectiveness of the measures to support residual risk ratings.

59. Recommendation. The corporation should document, in its risk register, mitigation measures for all risks, including those it has assessed as having effective risk management in place.

The corporation’s response. Agreed. The corporation agrees that the risk register should include mitigation measures for all risks, including those not currently reported to the board, and shall review the manner of documentation of such reporting by the end of the 2022–23 fiscal year.

Management of bridge assets and bridge operations

The corporation generally managed its bridge assets and bridge operations well but lacked a digitized asset inventory and database system for managing its bridge assets

60. We found that the corporation generally managed its bridge assets and bridge operations well. However, the corporation had not digitized its asset inventory and database system for its bridge locations.

61. The analysis supporting this finding discusses the following topics:

• Management of bridge assets
• Management of bridge operations

62. In 2007, Parliament enacted the International Bridges and Tunnels Act to ensure effective oversight of international vehicular and railway bridges and tunnels. In 2009, the International Bridges and Tunnels Regulations were introduced to establish a consistent approach for reporting on the maintenance and operation of these structures. These regulations apply to 25 international vehicular structures, but no railway bridges and tunnels are prescribed in these regulations. The act and regulations require the corporation to submit to Transport Canada reports on detailed visual inspections of each international bridge at least every 2 years and on underwater inspections every 5 years. The regulations also allow Transport Canada to conduct additional inspections. The act and regulations define an international bridge as one that connects any place in Canada to any place outside of Canada. Transport Canada has directed the corporation to not submit inspection reports for the following 4 domestic spans of its international bridges, because they connect 2 places in Canada:

• the Truck Ramp Bridge of the Blue Water Bridge
• the Canadian Bridge of the Thousand Islands International Bridge
• the North Channel Bridge and Canal Bridge of the Seaway International Bridge

63. The corporation also submits inspection reports annually to Public Services and Procurement Canada of all spans of 3 of its international bridges, according to long-standing orders in council. Moreover, while there is no equivalent order in council for the Seaway International Bridge, the corporation submits annual inspection reports of all spans of this bridge to Public Services and Procurement Canada. Accordingly, the corporation annually completes inspections of all of its bridge spans, whether domestic or international.

64. Transport Canada oversees the security of international bridges through memorandums of understanding with bridge owners and operators. The memorandums require the establishment of bridge security management systems for the Canadian‑owned components, to prevent and mitigate security incidents. A security incident is defined as an event that could result in death, injury, significant property damage, or serious disruptions to operations, works, or equipment. Examples include toll and port runners, protests, and car accidents.

65. The Economic Action Plan 2013 Act, numberNo. 2 allows the corporation to set and charge tolls, fees, or other charges for the use of a bridge or tunnel it owns or operates or to authorize another body to do so. While the Sault Ste. Marie International Bridge, the Thousand Islands International Bridge, and the US side of the Blue Water Bridge are subject to US regulations related to toll-rate setting, their toll rates are not constrained by a regulator. The Canadian side of the Blue Water Bridge and the Seaway International Bridge are not subject to any toll-rate setting regulations.

66. Our recommendation in this area of examination appears at paragraph 71.

67. Analysis. We found that the corporation could improve its bridge asset management systems and practices by developing a digitized asset inventory and database system to track and analyze bridge and related structure data (Exhibit 8).

68. Weakness—Bridge asset management planning and implementation. The corporation received asset management plans for all of its bridges, which contained data from inspections on current asset conditions and on maintenance and repair priorities. However, we found that the corporation lacked a digitized system to track and analyze this data.

69. We noted that the corporation had initiated a project to modernize its asset management program by implementing a digitized inventory and database of assets by bridge location. The implementation of an asset management system to collect, analyze, and report on asset data has been included as a strategic objective in the corporation’s corporate plans since 2016. By the end of our examination period, the corporation had not clarified a target implementation date.

70. This weakness matters because without a digitized asset inventory and database to track bridge and related structure data, the corporation cannot perform data-driven analyses of its assets to enhance its maintenance practices. For example, the digitization of bridge condition data from past inspections could allow the corporation to identify trends or commonalities, which could allow for more timely identification of deterioration issues. By digitizing the collection and analysis of data, the corporation would be able to make predictive maintenance decisions that could increase reliability, reduce accidents and failures, and lower costs.

71. Recommendation. The corporation should complete its development of a digitized asset inventory and database system to track and analyze bridge and related structure data.

The corporation’s response. Agreed. The corporation is proud of the quality of its asset management practices as demonstrated through the results of its annual independent inspections of its bridges and facilities. The corporation supports the view that the completion of the digitization of its asset inventory will be a valuable tool that will supplement existing quality asset management practices, and will allow continuity in the effective delivery of its mandate. Since 2015, the corporation has been actively engaged in the modernization of its asset maintenance planning and workflows to best inform and execute on future works. An asset management program was designed and implementation initiated. Most recently (in September 2021), the conversion of asset information to electronic documentation of its assets through a geographic information system was initiated and has provided immediate results. Further investments are subject to the critical financial impact of the reduced traffic due to the ongoing COVID‑19 border restrictions. The ultimate strength and timing of the recovery of cross-border traffic will guide when this comprehensive program can be fully realized.

72. Analysis. We found that the corporation had good systems and practices to manage its bridge operations (Exhibit 9).

Conclusion

73. In our opinion, on the basis of the criteria established, there was reasonable assurance that there were no significant deficiencies in the corporation’s systems and practices we examined. We concluded that the Federal Bridge 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.