In June 2009, the Audit and Assurance Services Branch (AASB) completed an Audit of Capacity Development which concluded that, while a number of programs have been developed to support capacity development, AANDC lacked a coordinated, risk-based, strategic approach to the design, delivery and implementation of capacity development programming. A Follow-up Audit of Capacity Development was identified by AASB in the 2013-14 to 2015-16 Risk-Based Audit Plan approved by the Deputy Minister on February 27, 2013.
AANDC has implemented a variety of programs with the objective of increasing capacity development at the individual, community, and organization levels. For 2012-13, AANDC’s spending on programs identified by the Department as capacity development totaled approximately $526M. Table 1 on page 7 of this report breaks down these investments into the Formula-based ($389M) and Proposal-based programs ($137M) included in this figure.
Audit Objective and Scope
The objectives of the audit were to assess: (i) the adequacy and effectiveness of departmental controls for designing, approving, integrating and reporting on capacity development programs; and, (ii) the appropriateness of the design of region and sector controls for delivering capacity development programming in an integrated, efficient and effective manner.
The scope of the audit covered the period April 1, 2009 to March 31, 2013 and included assessments of:
- the integration and design of capacity development programming, including linkages with other federal funders. Programming considered in this portion of the audit included programs designed to support capacity development within First Nation community governments, First Nation program service delivery organizations, First Nation institutions of government, First Nation economic development organizations and businesses, and with First Nation leaders and professionals.
- performance measurement, research and analysis activities that support design and redesign of capacity development programs and program investment decision-making processes.
- the integration of departmental processes and structures for making capacity development investment decisions, including, recipient risk and capacity assessment processes, program and regional investment decision-making processes, and default prevention and management processes. Programming considered in this portion of the audit included programs designed to support capacity development within First Nation community governments and First Nation institutions of government.
The audit did not include assessments of the effectiveness of regional and program systems and controls for administering and monitoring funding agreements with recipients.
Statement of Conformance
The Follow-up Audit of Capacity Development conforms with the Internal Auditing Standards for the Government of Canada, as supported by the results of the quality assurance and improvement program.
AANDC is gradually repositioning its approaches and programs to support First Nations in obtaining, strengthening and maintaining the capabilities necessary to set and achieve their objectives. Between 2009 and 2013, the Department, led principally by Regional Operations (RO) Sector, made progress in improving capacity development approaches on several fronts. In the fall of 2010, the General Assessment (GA) was developed by the Chief Financial Officer (CFO) Sector, RO Sector and other stakeholders to permit greater consideration of risk and needs in funding decisions. Between 2011 and 2013, the GA was adjusted and expanded to improve calibration and include greater coverage of specific programs, including Health Canada programs. In 2011-12, RO Sector began implementing its First Nations Community Development Framework (FNCDF) by performing a pilot roll-out to seven communities, expanding this pilot to four additional communities in 2012-13.
While RO sector and CFO sector have made some progress, our audit found that most regions and programs have made limited progress in designing and implementing integrated, strategic and coordinated approaches to capacity development. While many AANDC programs have made advances in how they support and reinforce capacity-related aspects within their own programs, few seek opportunities to create synergies with other programs and funders and to contribute to broader capacity-related objectives of First Nations communities, people, leaders, and professionals. Further, the capacity development assessment and planning tools developed by RO Sector and CFO Sector are not yet being leveraged in a consistent way by programs and regions to guide capacity development investments.
The audit found that departmental controls for designing, integrating and reporting on capacity development programs have improved significantly since the audit of Capacity Development in 2009, but require continued strengthening. The audit found that controls for approving capacity development programs were appropriate and effective. Further, the audit found that departmental controls for delivering capacity development programming in an integrated, effective and efficient manner have improved significantly since the audit of Capacity Development in 2009, but require continued strengthening.
The audit identified areas where the Department’s capacity development approaches and programs could be strengthened. Our recommendations include those designed to address the longer term challenge of integrating and designing better federal capacity development programs and those designed to achieve more immediate improvements to existing capacity development approaches and programs.
- AANDC should strengthen the focus on capacity development in its proposed policies and program activities through the following actions:
- The Senior ADM PSD, with the support of the Senior ADM RO, the CFO, and the ADM NAO, should work with all ADMs to establish departmental capacity development priorities and/or principles to guide the Department in making improvements to its capacity development policies and program activities. Due consideration should be given to opportunities for each program to enforce synergies with other programs and support the broader capacity development needs of First Nations communities, people, institutions and professional organizations.
- The Senior ADM PSD, with the support of the Senior ADM RO, the CFO, and the ADM NAO, should work with all ADMs to ensure that the policy development and program design and approval functions of the Department include an appropriate process and challenge function to ensure that the Department’s capacity development principles and/or priorities are considered and reflected in all policy and program proposals, and that planned capacity development activities are sufficient to achieve the Department’s capacity development priorities.
- The Senior ADM PSD, with support of all AANDC senior executives, should:
- Facilitate the establishment of research and data analysis priorities to support the Government of Canada in improving First Nations capacity development approaches and programming; and
- Review and clarify the department’s role as a coordinator and facilitator of research and programming focused on First Nations capacity development, with other Government departments, academia and other stakeholders interested in researching and investing in First Nations capacity development.
- The Chief Financial Officer, with support of the Senior ADM RO and ADM NAO, should review and improve linkages between the General Assessment, Default Prevention and Management regime and capacity development program activities to ensure that First Nations with the greatest capacity development needs and potential are given appropriate focus by regions and programs.
- The Senior ADM RO, with support of the Chief Financial Officer, Senior ADM PSD and program ADMs, should analyze the Department’s capacity development investments across regions and programs to determine whether program and community-level approaches and funding allocations are informed by the capacity-related needs of communities, considerate of risk, and aligned with departmental priorities for capacity development.
Based on the results of analysis, and guided by AANDC’s immediate capacity development priorities, the Senior ADM RO and program ADMs, with support of the Chief Financial Officer, should act upon opportunities to strengthen capacity development activities within each AANDC program.
Management is in agreement with the findings, has accepted the recommendations included in the report, and has developed a management action plan to address them. The management action plan has been integrated in this report.
Capacity Development is the process through which individuals, organizations, and societies obtain, strengthen and maintain the capabilities to set and achieve their own development objectives over time.
From AANDC's perspective, capacity development plays a central role in contributing to the Department's mandate of supporting Aboriginal people (First Nations, Inuit and Métis) and Northerners in their efforts to: improve social and economic prosperity; develop healthier, more sustainable communities; and, participate more fully in Canada`s political, social and economic development to the benefit of all Canadians. To that end, AANDC has implemented a variety of programs with the objective of increasing capacity development at the individual, community, and organization levels.
In June 2009, Audit and Assurance Services Branch completed an Audit of Capacity Development which concluded that, while a number of programs have been developed to support capacity development, AANDC lacked a coordinated, risk-based, strategic approach to the design, delivery and implementation of capacity development programming.
Between 2009 and 2011, the Department, led by Governance Branch of the Regional Operations (RO) Sector examined the concept of consolidating approximately 30 capacity development programs with total funding of $641M under a horizontal authority. During this time, senior managers from across the department worked collaboratively in developing a model performance measurement strategy and logic model for capacity development. During 2012 and 2013, momentum slowed on capacity development initiatives. Despite these challenges in progressing on horizontal initiatives, RO Sector continued to make progress on several fronts.
In 2011-12, the RO Sector began promoting and seeking department-wide acceptance of its First Nations Community Development Framework (FNCDF). In 2012-13, 11 CDF demonstration projects were executed to test the FNCDF principles. The FNCDF integrates capacity needs assessment and targeted investments, drawing on several capacity development programs of RO Sector. In 2012-13, in collaboration with Health Canada, which had also been working on promoting a community-based development framework, the two approaches were merged and work began on developing a single approach to community development between the two departments. In support of the FNCDF, RO Sector finalized and deployed the Governance Capacity Planning Tool (GCPT), a tool designed to allow First Nations communities to self-assess their governance-related needs and develop a community-focused multi-year plan to strengthen community governance. Some regions used the GCPT and resulting plans to inform some of their capacity development investments in 2012-13. RO Sector reported that 53% of First Nations have completed a governance self-assessment in 2012-13, with strongest adoption in Ontario, where 117 of 127 First Nations have completed the process.
In the fall of 2010, the General Assessment (GA) was developed by CFO Sector, RO Sector and other stakeholders to permit greater consideration of risk and needs in funding decisions. The GA, currently in its third version, is adjusted and expanded each year to improve calibration and include greater coverage of specific programs, including Health Canada programs. Capacity development is also a central focus of the Department's Default Prevention and Management Policy (DPMP), implemented in 2011 as a replacement to the former Intervention Policy. One of the aims of the DPMP is to "support community capacity development so that communities continue to increase their ability to self-manage and prevent default and default recurrence".
At the regional level, there has also been some progress toward a more strategic and coordinated approach to community capacity development. In BC Region, the Community Initiatives Unit was formed in 2012-13 to support comprehensive community planning and oversee capacity development investments for First Nations communities with the highest capacity related needs. BC Region also uses a cross directorate approach to review and provide input on community development plans and proposals.
Other regions have also introduced approaches to support community capacity development. Between 2007 and 2011, Saskatchewan Region implemented Comprehensive Community Based Planning in collaboration with Health Canada, Saskatchewan Tribal Councils and the Cities and Environment Unit at Dalhousie University. Yukon Region sponsors an annual First Nation Governance Capacity Conference in partnership with the Yukon Government and the Council of Yukon First Nations. Ontario Region is working with First Nations in Northwestern Ontario to increase their capacity to seize resource development opportunities in the "Ring of Fire" region. Led by RO Sector in 2012-13, regional staff involved in capacity development formed a Community Development Framework Managers Network as a community of practice for sharing of information and best practices.
In 2011-12, CFO Sector updated financial account codes to make tracking of capacity development investments possible. These financial codes capture most of the department's capacity development programs focused at communities and Aboriginal organizations, but do not include all capacity development aspects of specific programs (e.g. education programming, social services, income assistance active measures, etc.). For 2012-13, AANDC's spending on programs labeled as capacity development totaled approximately $526M. The table below breaks down these investments into Formula-based Core Funding ($389M) and Proposal-based and Targeted Funding ($137M).
Table 1: AANDC 2012-13 Capacity Investments - Formula-driven Core Funding ($millions)
||First Nation Bands
|Formula Driven Funding (i.e. core funding and formula-based programs)
|Band Support Funding
|Indian Government SupportFootnote 1
|Band Employee Benefits
|Tribal Council Funding
|Aboriginal Representative Organizations
Table 2: AANDC 2012-13 Capacity Investments - Proposal Driven and Targeted Programs ($millions)
||First Nation Bands
|Proposal Driven Funding (i.e. proposal-based funding and targeted projects)
|Community Economic Development
|Consultation and Policy Development
|Professional & Institutional Development
|Circuit Rider Training
|Community Support Services Program
|RLEMP / RLAP
|Band Advisory Services (ceases as of 2014-15)
As detailed in the above tables, $65M of AANDC's $526M of capacity development spending is targeted at specific capacity building initiatives within First Nations communities. The balance of the funding is either formulaic ($389M or 74%) or targeted at other organizations. More detailed spending by program and region are included in Appendices D, E and F.
3. Approach and Methodology
The audit was conducted in accordance with the requirements of the Treasury Board Policy on Internal Audit and followed the Internal Auditing Standards for the Government of Canada. The audit examined sufficient, relevant evidence and obtained sufficient information to provide a reasonable level of assurance in support of the audit conclusion.
The audit team conducted fieldwork through interviews with AANDC headquarters and regional staff, questionnaires of regions and programs, documentation review, analysis of capacity development spending for years 2009-10 to 2012-13, analysis of AANDC program authorities, analysis of AANDC capacity assessment and planning processes and tools, and analysis of capacity development processes and governance structures at the level of the Department, Sectors and Regions.
For purposes of assessing integration and design of capacity development programming, performance measurement, research, and analysis activities, the following AANDC programs were selected for inclusion: Reserve Land and Environment Management Program, First Nations Child and Family Services, Elementary and Secondary Education, First Nations Land Management, Aboriginal Representative Organizations, Professional and Institutional Development, and Tribal Council Funding. These programs were selected on the basis of materiality and the extent to which they could be employed to target capacity development investments.
For purposes of assessing the integration of departmental processes and structures for making capacity development decisions, all AANDC Regions were included in the scope of our audit.