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ARCHIVED - Audit of the Management of Treasury Board Vote 35

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Assurance Statement

The Internal Audit and Evaluation Bureau has completed an audit of the management of Treasury Board (TB) Vote 35. The objective of the audit was to assess the effective management of TB Vote 35 within the Treasury Board of Canada Secretariat (the Secretariat). The audit approach and methodology followed the Internal Auditing Standards for the Government of Canada and the Institute of Internal Auditors' International Standards for the Professional Practice of Internal Auditing.

The examination was conducted during the period of July and August 2009 and covered TB Vote 35 allocations between April 1 and June 30, 2009.

The audit consisted of interviews, documentation review, and an examination of TB Vote 35 allocations using a judgmental sampling methodology. The audit evidence gathered is sufficient to provide senior management with reasonable assurance of the results derived from this audit.

We conclude with a high level of assurance that there was effective management of TB Vote 35 within the Secretariat.

TB Vote 35 was a special one-time vote created to expedite the flow of funds in support of Budget 2009. The allocation of funds from this vote took place between April and June 2009. Since there is no expectation of continued usage of TB Vote 35 and no major deficiencies were found, there are no recommendations outlined in this report.

In the professional judgment of the Chief Audit Executive, sufficient and appropriate audit procedures have been conducted and evidence has been gathered to support the accuracy of the opinion provided in this report. The opinion is based on a comparison of the conditions, as they existed at the time of the audit, against pre-established audit criteria. The opinion is only applicable for the entities examined and for the time period specified.

Executive Summary

Background

The goal of Budget 2009 was to introduce measures to help stimulate the economy. Implementation of these measures required sound risk management and the need to balance the expeditious flow of funds with appropriate due diligence. TB Vote 35 was developed to help achieve such a balance.

Budget 2009, including Canada's Economic Action Plan, was tabled in the House of Commons on January 27, 2009. The 2009–10 Main Estimates were tabled in the House of Commons on February 26, 2009; however, there was insufficient time to incorporate Budget 2009 items by that date. To expedite the flow of funds, a new central vote, TB Vote 35, was included in the 2009–10 Main Estimates in the amount of $3 billion. This vote was designed to be a temporary measure to allocate funds to departmental appropriations between April 1 and June 30, 2009. Specifically, it allowed funds to be allocated before late June, when the first Supplementary Estimates were approved by Parliament.¹

Between April 1 and June 30, 2009, approximately $2.1 billion was allocated from TB Vote 35 to government departments.²

On April 7, 2009, the Secretary of the Treasury Board approved the conduct of an audit of the management of TB Vote 35 on the recommendation of the Secretariat's audit committee (Government of Canada Audit Committee).

Objective and scope

The objective of the audit was to assess the effective management of TB Vote 35 within the Secretariat.

The audit focussed on activities within the Expenditure Management Sector as the manager of TB Vote 35.

The audit did not include an assessment of the following:

the accuracy and integrity of the information provided by the requesting departments to access TB Vote 35; and
the use of TB Vote 35 allocations within departments.

Conclusion

The audit found that the management of TB Vote 35 within the Secretariat was effective.

Specifically, the Secretariat developed and documented clear assessment criteria that were reasonably well-defined and applied consistently. Further, items approved by Treasury Board were properly recorded and reported as allocation transfers from TB Vote 35 to the respective departments. The assurance statement presented at the outset of this report reiterates this conclusion and provides details regarding the level of assurance and methodology.

Management response

The Expenditure Management Sector agrees with the findings of the audit. As there are no recommendations, there is no management action plan; however, the minor points raised by the audit team will be reviewed for their applicability to the management of other central votes.

1. Background

1.1 Treasury Board Vote 35

What is TB Vote 35?

TB Vote 35 is a $3 billion centrally financed vote³ found under Secretariat in the 2009–10 Main Estimates.

Why was TB Vote 35 created?

To expedite the flow of funds, a new central vote, TB Vote 35, was included in the 2009–10 Main Estimates in the amount of $3 billion. This vote was designed to be a temporary measure to allocate funds to departmental appropriations between April 1 and June 30, 2009. Specifically, it allowed funds to be allocated before late June, when the first Supplementary Estimates are approved by Parliament.

How did TB Vote 35 work?

TB Vote 35 allocated funds to supplement the appropriations of government departments.

No funds are spent directly from this vote; therefore, there are no expenditures against TB Vote 35.

How much was allocated using TB Vote 35?

Although TB Vote 35 was appropriated $3 billion from Parliament during the specified period (April 1 to June 30, 2009), the amount actually allocated to government departments was approximately $2.1 billion.

1.2 Role of the Treasury Board and the Secretariat regarding TB Vote 35

The Secretariat is the administrative arm of the Treasury Board and has a dual mandate: to support Treasury Board in its role as the government's management board and budget office and to fulfill the statutory responsibilities of a central government agency.

In accordance with the wording of TB Vote 35, departments needed to seek Treasury Board's approval to access the vote. Approval is sought through a Treasury Board submission.

As part of its role to support Treasury Board, the Secretariat makes recommendations and provides advice on all Treasury Board submissions, including those requesting access to TB Vote 35.

To assess TB Vote 35 requests, Secretariat officials developed criteria to determine whether to recommend these requests for Treasury Board approval.

The overall management of TB Vote 35 within the Secretariat was centralized in one area, the Expenditure Management Sector.

Expenditure Management Sector

The Expenditure Management Sector (EMS) within the Secretariat is responsible for managing centrally financed votes such as TB Vote 35.

Regarding TB Vote 35, EMS officials were responsible for the following:

development of the assessment criteria to review TB Vote 35 requests;
review and acceptance of documentation related to TB Vote 35 requests, such as the Treasury Board submission and the cash flow analysis;
allocation of funds from TB Vote 35 to the requesting department's appropriations through the Secretariat's allotment control system,⁴ once approval was obtained; and
preparation of reporting information related to TB Vote 35 including the 2009–10 Supplementary Estimates, the 2010 Public Accounts of Canada, and quarterly reporting on Canada's Economic Action Plan.

2. Audit Details

2.1 Authority for the Audit

An audit of the management of TB Vote 35 was identified on the basis of:

recent change (creation of this one-time vote in the 2009–10 Main Estimates);
materiality (potential allocation of $3 billion) in a limited time span (April to June 2009); and
significance to government priorities (Budget 2009).

2.2 Audit Objective

The objective of the audit was to assess the effective management of TB Vote 35 within the Secretariat.

More specifically, this audit focussed on assessing the extent to which:

Items recommended to Treasury Board met Secretariat criteria for accessing TB Vote 35; and
Items approved by Treasury Board were properly recorded and reported as allocation transfers from TB Vote 35 to the respective departments.

2.3 Audit Scope

The audit focussed on activities within the EMS in its role as manager of TB Vote 35.⁵

The examination was conducted during the period of July and August 2009 and covered TB Vote 35 allocations between April 1 and June 30, 2009.

Between the initial approval of this audit (April 2009) and the end of the examination period (August 2009), TB Vote 35 allocations were reported in the 2009–10 Supplementary Estimates A and as an annex to Canada's Economic Action Plan: A Second Report to Canadians June 2009. However, the audit limited its assessment of the accuracy of reporting to the 2009–10 Supplementary Estimates A, because it contained more detailed information concerning the allocations than the June 2009 status report.⁶

In addition, the audit did not include an assessment of the following:

the accuracy and integrity of the information provided by the requesting departments to access TB Vote 35; and
the use of TB Vote 35 allocations within departments.

2.4 Audit Criteria

Audit criteria were developed in consideration of the risks associated with the Secretariat's administration of TB Vote 35 and were based on the Office of the Auditor General of Canada's (OAG) examples of possible criteria for Canada's Economic Action Plan⁷ and the Office of the Comptroller General's Core Management Controls (as they apply to the Secretariat).

Two overall audit criteria were applied:

that clear and well-defined assessment criteria⁸ are documented and applied consistently; and
that allocation transfers are fully and accurately recorded and reported.

These audit criteria were supplemented by a series of sub-criteria, which are presented in Appendix 2.

2.5 Approach and Methodology

The audit approach and methodology is consistent with the Internal Auditing Standards for the Government of Canada and the Institute of Internal Auditors' International Standards for the Professional Practice of Internal Auditing. These standards require that the audit be planned and performed in such a way as to obtain reasonable assurance that audit objectives are achieved. The audit was conducted in accordance with an audit program that defined audit tasks to assess each criterion.

The approach used in carrying out the audit included the following:

Review of information related to TB Vote 35, including the processes for allocating funds from this vote;
Interviews with EMS management and staff, Program Sector analysts, and representatives from Legal Services;
Process walkthroughs to observe the recording of TB Vote 35 allocations within the allocation control system; and
Review of a judgmental sample of 34 allocations from TB Vote 35:
- The sample consisted of allocations, totalling approximately $1.8 billion, reported in the summary table⁹ in the 2009–10 Supplementary Estimates A. This sample represented approximately 64 per cent of all approved allocations, which in turn represented 85.7 per cent of the $2.1 billion of allocated funds.