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Table 11a: Internal Audits (reporting period 2008-09)

Veterans Affairs Canada develops its annual Audit and Evaluation Plan using a risk-based approach. This Plan was approved by the Audit and Evaluation Committee, chaired by the Deputy Minister. The intent of the Audit and Evaluation Plan is to ensure that the projects are clearly aligned with Veterans Affairs Canada's Five-year Strategic Plan, Program Activity Architecture, and Management Accountability Framework. The Department undertakes audit and evaluation projects that are deemed the highest risk. To focus attention on those areas, where use of the available resources would best achieve the objectives of Audit and Evaluation, the following criteria are considered during project selection: materiality, likelihood, complexity and sensitivity/reputation. During the ranking of the proposed engagements, consultations are held with senior managers, program managers, and Audit and Evaluation staff. Findings and recommendations of previous audits, evaluations and reviews, as well as the extent of follow-ups and corrective actions taken by management are also used to assess potential projects. Audit and Evaluation schedules are compared with those of the Office of the Auditor General, the Commissioner for the Environment and Sustainable Development and the Office of the Comptroller General in order to prevent overlapping visits and undue interference with operations. Consultation with partners is conducted on an ongoing basis.

The long range plan attempts to provide some balance, so that some functions, activities and organizational entities are covered annually through cyclical projects (e.g., Organizational Governance and Residential Care). Follow-ups to findings also contribute to current and future year planning. The Plan has some flexibility to allow for requests from management for special studies demanded by unforeseeable circumstances, from Central Agencies for the Transfer Policy requirements, and for follow-up reviews on the actions taken on recommendations.

It is important to note that the Audit and Evaluation Plan is effective only to 2009-2010 and is re-evaluated on an annual basis.

Name of Internal Audit	Audit Type	Status	Completion Date	Electronic Link to Report
Post-payment Verification Audit	Internal Audit	Completed	August 2008	www.vac-acc.gc.ca/general/sub.cfm?source=department/reports/deptaudrep/post-payment-audit
Financial Management and Controls, Phase II	Internal Audit	Completed	September 2008	www.vac-acc.gc.ca/general/sub.cfm?source=department/reports/deptaudrep/fin_manag_aud_sep08
Follow-up to the 2006 Audit of Outsourcing of Health Claims Administration	Targeted Follow-up Audit	Completed	December 2008	www.vac-acc.gc.ca/general/sub.cfm?source=department/reports/deptaudrep/follow-ohcd-dec08
Task Force Follow-up Report	Follow-up of Previous Audits	Completed	January 2009	www.vac-acc.gc.ca/general/sub.cfm?source=department/reports/deptaudrep/foup2009
Federal Health Claims Processing System Program of Choice Analysis Audit	Internal Audit	Completed	June 2009	www.vac-acc.gc.ca/general/sub.cfm?source=department/reports/deptaudrep/2009/june-pcaa
Control of Large Program Expenditures Items	Internal Audit	Completed	May 2009	www.vac-acc.gc.ca/general/sub.cfm?source=department/reports/deptaudrep/2009-june-lpe
Ste. Anne's Hospital – Capital Renovation Project Audit	Internal Audit	In Progress	planned June 2009
Residential Care – Phase II Atlantic Region	Internal Audit	In Progress	planned July 2009
Core Management Controls	Assessment and support to holistic opinion	In Progress	planned November 2009
Adequacy of Corporate Risk Management	Internal Audit	In Progress	planned February 2010
Audited Financial Statements Readiness	Assistance to Audited Financial Statement Readiness	In Progress	planned April 2010
Management of Medications at Ste. Anne's Hospital	Internal Audit	Deferred to 2010-11 by 2009 Risk-based Internal Audit Plan	N/A
Organizational Governance Phase III Audit/Evaluation	Combined audit and evaluation project	Cancelled by 2008 Risk-based Internal Audit Plan	N/A
Other Health Purchased Services (OHPS) – Ste. Anne's Hospital and Other OHPS Charges	Internal Audit	Cancelled by 2008 Risk-based Internal Audit Plan	N/A
Equipment Recycling Program	Internal Audit	Cancelled by 2009 Risk-based Internal Audit Plan	N/A
Residential Care Phase III Audit	Internal Audit	Cancelled by 2009 Risk-based Internal Audit Plan	N/A
Business Continuity Planning Audit	Internal Audit	Cancelled by 2009 Risk-based Internal Audit Plan	N/A
Conflict of Interest Audit	Internal Audit	Cancelled by 2009 Risk-based Internal Audit Plan	N/A

Electronic Link to Report: Audit and Evaluation Reports are posted on the Veterans Affairs Canada Web site upon completion.

Note: The above list is based on a risk-ranking priority exercise and was approved by the Audit and Evaluation Committee on April 2, 2007. The Audit and Evaluation Plan is revisited annually and the order of priority and/or necessity of the work is subject to change due to changing Departmental or governmental priorities.

Significant findings from Audits

Post Payment Verification Assurance Audit

The purpose of the Post Payment Verification Assurance Audit was: to provide assurance that VAC's management frameworks and practices regarding post payment verification procedures were compliant with Treasury Board Account Verification Policy, Financial Administration Act, and the Payments and Settlements Requisitioning Regulations, 1997.

This report outlined observations and findings from the review of VAC's Quality Assurance Framework of the Account Verification Process. Contained within this report are ten important recommendations relating to the Department's need to clarify its definition of critical errors, improve the accuracy and consistency of its post payment verification reviews, implement a follow-up process for identified errors, provide additional training for staff and develop a quality assurance process.

Financial Management and Controls Audit, Phase II

This internal audit was conducted to assess whether VAC's financial control framework was adequate, and ensure that: allocated funds are spent for their intended purposes and within approved limits; financial information is accurate, and; appropriate controls are maintained over expenditures. Significant recommendations made by this audit are:

• Ensure finance and administration staff receive training and development similar to the discontinued financial modules of the middle management and supervisors orientation training program.
• Circulate updated financial policies and bulletins and provide staff explanatory briefings as necessary.
• Complete and promulgate a comprehensive financial management control framework.
• Enhance controls associated with the release of program, procedural and policy information.
• Identify, promote and monitor the training required by all financial officers and administrative staff.
• Ensure adequate training is provided to all delegated staff on authorities under FAA specifically Sections 32, 33 and 34.

Federal Health Claims Processing System Program of Choice Analysis Audit

The focus of the audit was on VAC's overall administration of the Treatment Benefits Program which provides treatment benefits and services to eligible veterans. The audit identified a number of opportunities to improve the administration of the program, including: fully implementing the recently adopted management framework for the Treatment Benefits Program; completing the Benefit Grid Review and initiating reviews of the Dental Services and Prescription Drug Programs; making greater use of the Benefit Review and Formulary Review Committees; and conducting quality reviews of the program to ensure compliance with legislative and policy requirements.

The audit observed that specific systems edits must be established for benefits on a province/territory basis, and that VAC has not dedicated sufficient resources to this activity. For some of the Programs of Choice, the edits had not been updated for a number of years. Dollar limit edits had not been established for all benefits covered by the program.

Policies require significant updating and consolidation, and improvements are required to management processes used to monitor program delivery's compliance with policy. The audit contains recommendations to update and consolidate policies and procedures for the program. Improvements are also required to the provision of information and regular reporting to operational, functional and senior managers.

Control of large program expenditures Items Audit

The objectives of the audit were to: review large program expenditure transactions and assess the internal control framework applicable to those transactions; assess the accuracy of accounting (classification of transactions) for those transactions; evaluate the appropriateness of the delegated authorities of positions which approved these payments; analyse and validate the post or pre-payment verification process for selected large transactions; and analyse accounts used to process capital expenditures and capital contributions. This audit made essential recommendations in the following areas:

• Introducing stronger and more consistent controls for handling changes to clients' direct deposit profile.
• Strengthening the policies and business processes applicable to the verification of client income, for the Earnings Loss program.
• Implementing measures to ensure that, as demand for contract beds diminishes, Veterans Affairs Canada does not incur costs for long-term care beds that are not needed.
• Clarifying the roles and responsibilities associated with the conduct of operating cost reviews, improve the policies and procedures for conducting these operating cost reviews, and improve their timeliness.

Table 11b: Evaluations (reporting period 2008-09)

Veterans Affairs Canada develops its annual Audit and Evaluation Plan using a risk-based approach. This Plan was approved by the Audit and Evaluation Committee, chaired by the Deputy Minister. The intent of the Audit and Evaluation Plan is to ensure that the projects are clearly aligned with Veterans Affairs Canada's Five-year Strategic Plan, Program Activity Architecture, and Management Accountability Framework. The Department undertakes audit and evaluation projects that are deemed the highest risk. To focus attention on those areas, where use of the available resources would best achieve the objectives of Audit and Evaluation, the following criteria are considered during project selection: materiality, likelihood, complexity and sensitivity/reputation. During the ranking of the proposed engagements, consultations are held with senior managers, program managers, and Audit and Evaluation staff. Findings and recommendations of previous audits, evaluations and reviews, as well as the extent of follow-ups and corrective actions taken by management are also used to assess potential projects. Audit and Evaluation schedules are compared with those of the Office of the Auditor General, the Commissioner for the Environment and Sustainable Development and the Office of the Comptroller General in order to prevent overlapping visits and undue interference with operations. Consultation with partners is conducted on an ongoing basis.

The long range plan attempts to provide some balance, so that some functions, activities and organizational entities are covered annually through cyclical projects (e.g., Organizational Governance and Residential Care). Follow-ups to findings also contribute to current and future year planning. The Plan has some flexibility to allow for requests from management for special studies demanded by unforeseeable circumstances, from Central Agencies for the Transfer Policy requirements, and for follow-up reviews on the actions taken on recommendations.

It is important to note that the Audit and Evaluation Plan is effective only to 2009-2010 and is re-evaluated on an annual basis.

Name of Evaluation	Program Activity	Evaluation Type	Status	Completion Dates
Evaluation Framework for New Veterans Charter	Evaluation Framework	Formative	Completed	March 2008
Partnerships Contribution Program	Evaluation	Summative	Completed	April 2008
War Veterans Allowance Program	Evaluation	Summative	Completed	May 2008
Organizational Governance Volume III Western Region	Review		Completed	September 2008
Evaluation of the Operational Stress Injury (OSI) Clinic Network	Evaluation	Summative	Completed	October 2008
Halifax Rehab Case Management Pilot Evaluation Framework	Evaluation	Formative	Completed	December 2008
Long Term Care Evaluation Assessment	Evaluation	Assessment	Ongoing	June 2009 (draft)
Review Redress for the Re-establishment Program of the New Veterans Charter (NVC)	Evaluation	Summative	Ongoing	June 2009
Dementia Care	Evaluation	Summative	Ongoing	June 2009
Electronic Link to Reports: Audit and Evaluation reports are posted on the Veterans Affairs Canada web site upon completion. www.vac-acc.gc.ca/general/sub.cfm?source=department/reports/deptaudrep

Note: The above list is based on a risk-ranking priority exercise and was approved by the Audit and Evaluation Committee on April 2, 2007. The Audit and Evaluation Plan is revisited annually and the order of priority and/or necessity of the work is subject to change due to changing Departmental or governmental priorities.

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