Audit of Liabilities (Continued)
|Recommendations||Management Actions||Responsible Manager (Title)||Planned Implementation Date|
|1. Key stakeholders, at both the regional and HQ levels, with liability identification, quantification and reporting responsibilities should assess the structure of current reporting relationships and accountabilities with a view to clarifying expectations, identifying gaps and initiating changes as appropriate. In particular, Management should consider opportunities to strengthen the linkage between accounting functions in the regions and the CFO Sector at HQ as a means to improve the reliability of controls associated with liabilities.||Over the last few years, the CFO Sector has been leading an 'audit readiness' initiative. A recent validation of controls documentation for Payables at Year End (PAYEs) and Environmental Liabilities noted similar gaps to those of the Internal Audit Report. The following actions are being undertaken to address the findings:
The departmental approach is to clearly state the responsibilities and accountabilities of all stakeholders in departmental policies.
The CFO sector has financial policy issuing authority and is currently revising its Payables at Year-end Policy and Procedures in consultation with stakeholders.
The revised policy and procedures will clarify roles and responsibilities of stakeholders and the expectations for liability identification, quantification and reporting. The review will be completed for this fiscal year-end.
|Director General, Corporate Accounting and Materiel Management (CAMM)||March 31, 2010|
The CFO will meet with the ADM's of Land and Economic Development (LED), Regional Operations (RO) and the Northern Affairs Office (NAO) to plan the development of a management control framework for Environmental Liabilities which will include the updating of INAC's Contaminated Sites Management Policy. The framework will be developed by June 30, 2010 along with an implementation plan.
The control framework will be based on the requirements of the following:
(with support of ADMs LED, RO and NAO)
|June 30th, 2010|
|Reporting relationships and the communication of roles and responsibilities between regions and HQ were identified in the October 2008 Evaluation of INAC's Contaminated Sites Policy and Programming as issues facing the Indian and Inuit Affairs (IIA) Contaminated Sites Management (CSM) Program. The IIA CSM Program is currently conducting a Program Review to improve program performance and management and address those issues prior to the upcoming renewal.||Director, Environment Directorate||March 31, 2010|
|2. A. The Northern Affairs Organization (NAO) Northern Contaminated Sites Program (NCSP) and the IIA Contaminated Sites Management Program should clearly identify the required skills and experience based on the liabilities-related job responsibilities of regional staff. Together with Regional Management, training sessions, materials and other tools should be developed and be rolled-out across all Regions to ensure that regional staff has a clear understanding of the applicable policies and regulations (Environmental Liabilities).||The Contaminated Sites Program completed a training session for all
staff on applicable policies and regulations relating to Environmental
Liabilities at the upcoming Project Manager's meeting (November
3-5th). As a result of this training session, the CSP's Accounting
for Costs and Liabilities corporate procedure will be updated to
ensure regional project managers understand the need to provide appropriately
substantiated and documented support for cost estimates that feed into
liability reporting through the annual exercise of drafting Detailed
Work Plans. These DWPs are signed-off by the Regional Directors
Information on applicable policies and regulations relating to Environmental Liabilities will be incorporated into the Orientation Training Package currently being developed for all new Program staff at both HQ and the Regions.
March 31, 2010
|The IIA CSM Program will identify the required skills and experience for liabilities-related job responsibilities in regions and at HQ. Either existing Environmental Learning Regime modules will be updated to reflect such requirements, or a new module will be developed to provide regional and headquarters staff with the required training.||Director, Environment Directorate||September 30, 2010|
|2. B. The Corporate Accounting and Reporting Directorate should clearly identify the required skills and experience based on the liabilities-related job responsibilities of regional staff. Together with Regional Management, training sessions, materials and other tools should be developed and rolled-out across all Regions to ensure that regional staff have a clear understanding of the applicable policies and regulations (Accounts Payable and Accrued Liabilities).||CFO Management believes that the Financial Officer (FI) competency
profile and the FI education requirements combined with adequate policies
and tools are sufficient for liability responsibilities.
With respect to tools and materials for PAYEs, the Corporate Accounting and Reporting Directorate, in consultation with Regional Managers of Accounting Operations, developed a standardized verification checklist as well as detailed procedures for all types of PAYEs (O&M, Salaries & Gs&Cs). The policy and procedures will also address the requirements for PAYEs that are carried forward from prior years. These elements will be included in the revised policy as well as the year-end procedures distributed to regions.
Training to regions will be delivered via presentations on the new policy & procedures.
|Director General, CAMM||March 31, 2010|
|3. In addition to providing the year-end timetable and procedures, the
CARD should ensure that each region obtains adequate training and a clear
understanding of their roles and responsibilities associated with reporting
PAYEs at year-end. This additional guidance and training should clearly
outline expectations surrounding:
|4. The CARD should clearly outline Regional Accounting Operations/ Transfer Payment Directorates' roles and responsibilities for reviewing PAYEs to ensure that estimates made are reasonable, appropriately supported and are in compliance with TBS and INAC Policies prior to submission to HQ.||Discussions with regions on roles & responsibilities related to PAYEs occurred on November 3-4 & 5 at the Conference of Regional Managers of Accounting Operations. The agreed upon roles & responsibilities from the above consultations will be included in the revised policy and procedures.||Director General, CAMM||March 31, 2010|
|5. The CARD should undertake quality assurance reviews as part of their compilation of PAYE balances from the regions at year-end. A review for reasonableness of recorded amounts and follow-up on unusual items should be performed.||The Corporate Accounting and Reporting in collaboration with Regional Accounting Services will undertake a review of PAYE account balances and undertake a quality assurance review on a sampling basis.
The Corporate Accounting and Reporting Directorate will develop and implement a formal review and analysis of PAYE balances on an annual basis.
|Director General, CAMM||March 31, 2010
September 30, 2010
|6. All regions should implement a formally documented and risk-based approach to identifying and assessing potential contaminated sites. To the extent that financial and human resource constraints pre-empt the timely identification and assessment of contaminated sites, management should consider identifying alternative options such as the sharing of resources between regions.||The Treasury Board definition of a contaminated site is a site at which substances occur at concentrations: (1) above background levels and pose or are likely to pose an immediate or long-term hazard to human health or the environment or (2) exceed levels specified in policies and regulations. Each contaminated site is classified using the CCME National Classification System (NCS) a scientific risk-based evaluation to allow the program to prioritize sites.
The Nunavut and Northwest Territories regional offices will produce a Site Assessment Action Plan to document the Program's approach to addressing the assessment of remaining suspected sites with consideration for the resource requirements, number of sites and remote location. The Yukon's assessment plan is dictated by the Yukon Devolution Transfer Agreement effective April 1, 2003.
The Regional Directors will report on the progress against their site assessment action plan on an annual basis.
|Director, CSP - NU
Director, CSP - NWT
|January 31, 2010|
|The IIA CSM Program does not currently have a nationally consistent, documented and risk-based approach to identifying potential contaminated sites. The development of such an approach will be addressed as part of the CSM Program Renewal in fiscal year 2010-2011.
The IIA CSM Program is currently undertaking a risk-based approach to the assessment and remediation of contaminated sites as part of the FCSAP funding process. Contaminated Sites are classified according to the CCME National Classification System for Contaminated Sites, which categorizes contaminated sites according to risk to human health and the environment. Contaminated sites are then managed on a priority basis.
Headquarters is conducting a Program Review of the IIA CSM Program in partnership with regional staff. This Review will address the issue of consistency of documentation and data collected in contaminated sites management activities across the country. It will also establish clear targets in order to facilitate the timely assessment and remediation of sites and implement performance indicators to gauge progress.
|Director, Environment Directorate||March 31, 2011|
|7. The Contaminated Sites Program (HQ) should clearly outline and communicate to the regions the documentation protocols for cost estimates. Each line item within a cost estimate should have supporting documentation (e.g. independent site assignment, contract bid, industry standard costs). The rationale used to determine a preferred remediation approach should be outlined and documented in order to appropriately link the selected remediation approach and estimated liability to the independent assessment obtained.||The CSP works closely with independent engineers to peer review all major contaminated sites projects, including reviewing the selection of remediation approach and associated cost estimates. The CSP's Cost Estimating Guide also includes a section on Information Required to Support Estimates which will guide project managers. A new database is being developed to store all cost related information. All studies and closure options reports are currently being saved in Collaboration and its full implementation is expected next fiscal year.||Director, CSP||June 30, 2010|
|The IIA CSM Program will review current documentation practices for cost estimations in regions and the North in order to determine the feasibility of developing national documentation protocols. Consultations with regional and northern staff will be conducted to determine the most appropriate methods of establishing documentation protocols.||Director, Environment Directorate||March 31, 2010|
|8. The process to adjust cost estimates submitted by the regions should incorporate the engagement of the regional staff involved in providing those estimates.||Cost estimates are developed by regional project managers and approved by the Regional Director and Regional Director General through the Detailed Work Plan process. When an adjustment is made the following year, the same approval process will apply.
The Contaminated Sites Program Accounting for Costs and Liabilities corporate procedure will be revised to include the requirement for approval of the final liability report by the Director's Committee prior to submission.
|TBD (dependent on final TBS guidance document)|
|9. LMRB should perform a review of all claim files to ensure that they meet the current requirements for documentation standards as outlined within the respective TBS and INAC policies.||LMRB, in conjunction with Department of Justice, will review all estimated amounts for each claim, in order to ascertain that it is supported by proper documentation.
Furthermore, emphasis will be put on comprehension and understanding of the criteria for assessing the outcome of each claim. This step should reinforce the accuracy of reporting on the likelihood that claims materialize.
|Manager, Business Centre, SPR, LMRB, PSD||Q2 of FY 2009-10|
|Obj #||Risk||High Level Control Objective||Control Activity||Source|
|Accounts Payable and Accrued Liabilities|
|1||Accounts Payables/ Accrued Liabilities are not recorded completely and accurately on the balance sheet, thereby under/overstating the Department's liabilities.||Accounts Payables/Accrued Liabilities are recorded completely, accurately, and in the proper accounting period.||1.1 - RCMs review their commitments to identify those payables for which they initiated the expenditure and which meet established PAYE criteria.||FMM 8.7 (7.1a)|
|1.2 - RCMs review PAYE's established in previous years to identify those that are still liabilities and those that need to be closed.||FMM 8.7 (7.1b)|
|1.3 - At year-end a search for unrecorded liabilities is performed to ensure the liability balance within the region is complete.||Best Practice|
|Only liabilities that meet the requirements, as outlined within the Department's FMM, are recorded as PAYEs||1.4 - RCMs certify under section 34 of the Financial Administration Act for those items that meet PAYE criteria.||FMM 8.7 (7.1b)|
|1.5 - Director of Corporate Services certify that their region has fully complied with Treasury Board Manual, Chapter 5-05, Policy on Payables at Year-End (PAYE) via a letter of representations that is provided to HQ at year-end.||Year-end Timetable and Procedures|
|2||Accounts Payables/Accrued Liabilities are not recorded accurately on the balance sheet, thereby under/overstating the Department's liabilities.||Headquarters performs procedures to ensure Accounts Payable and Accrued Liabilities are recorded completely, accurately, and in the proper accounting period||2.1 - The Manager, Corporate Reporting and Compliance provides the regions with adequate guidance surrounding the year-end accrual procedures.||Best Practice|
|2.2 - The Manager, Corporate Reporting and Compliance reviews the regional and sectoral listings of A/P and PAYEs for reasonableness and compliance with applicable policies and directives.||Best Practice|
|2.3 - The Manager, Corporate Reporting and Compliance inquires with the regions and sectors of any unusual items noted||Best Practice|
|3||Liabilities related to settled claims are not complete and accurate at year-end||Settled Claims are reviewed, on a reasonable basis, for completeness and accuracy||3.1 - A representative at HQ reviews the listing of settled claims for completeness.||Best Practice|
|3.2 - A representative at HQ performs a reconciliation of claims settled and payments made throughout the year.||Best Practice|
|4||Lack of proper training, tools, capacity and resources may lead to non-compliance with INAC and TBS policies and directives||Regions/Sectors/Braches have adequate training, tools, capacity and resources to support effective/efficient compliance with applicable INAC and TBS policies and directives||4.1 - The ADM, Corporate Services, will issue an annual call letter and guidance on how programs and regions are required to provide year-end reporting requirements for contaminated sites.||7.10.1 (6.5b)|
|5||Environmental Liabilities may not be complete and accurate thereby under/overstating the Department's liabilities||Assessments performed result in accurate and complete recognition of environmental liabilities held by the Department||5.1 - A review process is in place to ensure that the Environmental Consultants selected to perform a site assessment are adequately trained and possess the necessary qualifications to provide an appropriate action plan for remediation, where deemed necessary (southern & northern regions).||Best Practice|
|5.2 - An independent review is performed on the most significant contaminated sites to ensure accuracy and completeness of the assessment performed (northern regions).||Best Practice|
|Environmental Liabilities are complete and accurate||5.3 - Regional Staff perform site visits and enquiry with FN to ensure that all contaminated sites are identified in a timely manner.||Best Practice (Interview Results)|
|5.4 - The Environmental Program Officer at HQ produces a cost liability report (crystal report) that is reviewed to ensure that liabilities for all sites are accounted for.||Best Practice|
|6||Estimates made to value environmental and contingent liabilities are not supported and therefore may be inaccurate||Estimated valuation of environmental and contingent liabilities is appropriately supported and documented||6.1 - Assessments made are appropriately supported and documented for each site.||Best Practice|
|7||Regions/Sectors/Branches are not in compliance with INAC policies and procedures||Audits and Evaluations are performed to ensure compliance with INAC policies and procedures||7.1 - NAP (Northern Affairs Program) conducts regular program audits and evaluations to determine compliance with Corporate Procedure requirements, EHS regulatory requirements and the department's progress towards the Contaminated Sites Program objectives and targets.||Northern Affairs - Contaminated Sites Program - New Corporate Procedures Manual|
|Claims and Litigation|
|8||Lack of timely review of General Litigation Claims could result in an under/overstatement of contingent liabilities||General Litigation Claims are reviewed for completeness and accuracy by the Department||8.1 - General Litigation Claims - LMRB monitors cases on a regular basis and significant cases are updated at a minimum annually.||FMM 7.10 Appendix A|
|8.2 - General Litigation Claims - A reconciliation is performed on a quarterly basis from iCase (DoJ database) to the National Case Inventory.||Best Practice|
|9||Estimates made to value contingent liabilities related to Specific Claims are not supported and therefore may be inaccurate||Estimated valuation of contingent liabilities related to Specific Claims is appropriately supported and documented||9.1 - Specific Claims - Assumptions, business rules and historical acceptance rates used in the determination of management's best estimate are documented and maintained on file by the Specific Claims Branch.||FMM 7.10 Appendix B Best Practice|
|Comprehensive Land Claims|
|10||Lack of timely review of Comprehensive Land Claims could result in an under/overstatement of contingent liabilities
Estimates made to value contingent liabilities related to Comprehensive Land Claims are not supported and therefore may be inaccurate
|Comprehensive Land Claims are reviewed for completeness and accuracy by the Department
Estimated valuation of contingent liabilities related to Comprehensive Land Claims is appropriately supported and documented
|10.1 - Comprehensive Land Claims - The Comprehensive Claims Branch monitors the status of each claim on a regular basis and the assessed outcome is updated for any changes in circumstances that may impact the likelyhood of settlement for each reporting period.||FMM 7.10 Appendix C Best Practice|
|10.2 - Assessments of the potential outcome and the estimate of the contingent liability is appropriately supported and documented for each claim. If an assessment of estimated liabilities can not be made, then an explanation is documented.||FMM 7.10 Appendix C Best Practice|
|Non-Litigation Claims including Special Claims|
|11||Lack of timely review of Non-Litigation Claims could result in an under/ overstatement of contingent liabilities
Estimates made to value contingent liabilities related to Non-Litigation Claims are not supported and therefore may be inaccurate
|Non-Litigation Claims are reviewed for completeness and accuracy by the Department
Estimated valuation of contingent liabilities related to Non-Litigation Claims is appropriately supported and documented
|11.1 - Non Litigation Claims - Each Sector and for Special Claims, the Special Claims Directorate/Human Resources Branch monitor the status of each non-litigation claim on a regular basis and the assessed outcome is updated for any changes in circumstances that may impact the likelyhood of settlement.||FMM 7.10 Appendix D Best Practice|
|11.2 - Assessments of the potential outcome and the estimate of the contingent liability is appropriately supported and documented for each claim. If an assessment of estimated liabilities can not be made, then an explanation is documented.||FMM 7.10 Appendix C Best Practice|
|General - Contingent Liabilities|
|12||Contingent Liabilities are not recorded accurately and completely in the financial statements (valuation and classification)||Contingent Liabilities are assessed for reasonableness and are recorded completely, accurately, and in the proper accounting period.||12.1 - The Director, Financial Policies, Systems and Accounting Director is responsible for reviewing information submitted from Sectors/Braches/Regions for reasonableness and compliance with applicable policies and directives.||FMM 7.3.11|
|12.2 - ADM or designated equivalent reviews all contingencies within their Sector/Branch/Region to ensure completeness, accuracy and reliability of the information related to contingencies provided by his/her Sector/Branch/Region.||FMM 7.4.2|
|12.3 - ADM or designated provides assurance on the information reported each quarter by his/her Sector/Brach/Region by means of certification.||FMM 7.4.3|
|13||Lack of training/knowledge may lead to inaccurate estimates/calculations thereby under/overstating the Department's liabilities||Regions/Sectors/Braches/HQ have adequate training and tools to perform they assigned tasks||13.1 - Individuals responsible for recording and/or reporting liabilities possess the adequate skills, knowledge and training required to perform their assigned tasks.||Best Practice|
|14||Unclear roles and responsibilities could lead to errors in the recognition and recording of liabilities, thereby under/overstating the Department's liabilities||Accountability and responsibilities are clearly understood by all parties||14.1 - A process exists to articulate, communicate and ensure a clear understanding of roles and responsibilities to all parties involved in the recognition and reporting of liabilities by the appropriate authorities (HQ/Sectors/Regions) thereby ensuring compliance with the INAC and TBS policies||Best Practice|
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