The Report of the Auditor General of Alberta—October 2016 was tabled in the Alberta Legislature November 7th. In his report, Alberta’s Auditor General Merwan Saher made 14 new and four repeated recommendations to various government departments and agencies.
The four repeated recommendations were made because the auditor general was not assured that enough had been done to implement the previous recommendations made by his office. In addition to two new performance audits (pages 21 and 31), the report contains the findings from the financial statement audits of government ministries, departments and regulatory funds, as well as provincial agencies; 146 entities for 2016.
Of note are the following audits:
Agriculture and Forestry—Agriculture Financial Services Corporation (pages 21 and 73)
The Agriculture Financial Services Act gives the Agriculture Financial Services Corporation (AFSC) a broad lending mandate. The Act allows AFSC to offer agriculture development loans and certain non-agriculture loans. We found weaknesses in the oversight of AFSC’s lending program. The department did not formally communicate to AFSC or document its performance expectations of the program. AFSC’s former board of directors did not ensure that AFSC has adequate systems to monitor and measure the program’s performance and its risks. Without a clear definition of the purpose of the lending program and its strategic objectives, AFSC’s lending activities could easily deviate from its development focus and replicate what other commercial lenders provide, rendering the lending program ineffective.
In our financial statement audit for the year ended March 31, 2016, we identified certain transactions involving a former vice president (who resigned in June 2015) that did not comply with AFSC’s established policies. The president and vice president entered into agreements that either did not comply with the corporation’s policies or did not have adequate legal and financial review. Training resources were wasted, and AFSC incurred unnecessary expenses as a result. AFSC’s board did not receive sufficient information on senior executives’ expenses to be able to provide proper oversight.
Human Services—Assured Income for the Severely Handicapped Program (page 31)
The AISH program serves over 50,000 Albertans by providing almost $1 billion in benefits annually. It is the second largest program Human Services delivers, administered by approximately 330 staff and has an annual operating cost of $33 million.
We examined the department’s systems and processes for ensuring the program is easily accessible to eligible Albertans and how it applies clearly defined criteria when making eligibility decisions. We also examined the department’s systems to measure, monitor and report on key activities of the program.
We concluded the Department of Human Services is unable to demonstrate that the AISH program is efficient. The AISH application process favours people who are good at completing forms and are persistent. Assessing eligibility takes too long, and the department cannot be sure its staff’s decisions are consistent. With its existing reporting process, the department does not know what it needs to change to improve the program.
Advanced Education—Athabasca University—IT Resumption (page 65)
Athabasca University relies heavily on its IT systems and infrastructure to deliver online student services, including course materials and course evaluations as well as daily corporate financial activities. Failure to recover promptly from a disaster affecting the data centre at the main campus in Athabasca would affect the university’s ability to continue providing these services.
In 2010 we recommended that Athabasca University improve its information technology resumption capabilities—assessing the risks and establishing off-site disaster recovery facilities, and completing and testing its existing disaster recovery plan to ensure continuous services are provided in the event of a disaster. We repeated our concerns and recommendation in 2013.
Six years later, the university has still not implemented our recommendation and appears incapable of doing so.
Financial reporting processes
We draw the attention of the all-party Standing Committee on Public Accounts to three entities we have audited and concluded require focused attention on improving their financial reporting processes. It is our responsibility to identify weaknesses, but it is management’s responsibility to put in place economic, efficient and effective financial management and internal control systems so as to minimize the cost of preparing and auditing financial information.
Culture and Tourism (page 81)—The department needs a consistent and effective process to assess the appropriate accounting treatment and legal implications of transactions that do not occur regularly.
Economic Development and Trade (page 85)—The department needs to improve its internal controls and quality review processes to ensure timely and accurate financial reporting.
Indigenous Relations (page 125)—For the third time, we have had to recommend that the department ensure its estimates are reasonable and properly supported.
Outstanding recommendations summary (page 17)
The payback on Albertans’ investment of audit dollars in our producing recommendations for improvement in the performance of and confidence in the public service is our confirmation through follow-up auditing that recommendations are implemented and substantial change has occurred.
We acknowledge the accomplishment of the managers who have implemented 27 of our recommendations in the last year. We also acknowledge the monitoring of the implementation of our recommendations by the Standing Committee on Public Accounts and its requests for status updates from departments and agencies.
The two ministries with the largest number of outstanding recommendations more than three years old and not ready for a follow-up audit are Environment and Parks, and Health.