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Environment Canada’s
Risk-Based Audit and Evaluation Plan
2008–2011

May 2008

Audit and Evaluation Branch

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3.0 PLANNING APPROACH

3.1 Environmental Scan

Government Priorities

In the last two years, the Government has made significant investments in cleaning the air and water, reducing greenhouse gas emissions, combating climate change, and protecting the natural environment. It has invested, for example, in Canada’s Clean Air Regulatory Agenda, Canada’s Chemicals Management Plan, the EcoEnergy Initiative, Canada EcoTrust, the EcoTransport Strategy. Budget 2008 included new measures to strengthen and ensure effective implementation of Canada’s EcoAction Plan.

The Federal Accountability Act underscores the importance of the Government’s commitment to accountability and transparency. The Act emphasizes the key roles of the audit and evaluation functions in providing the necessary support to the Deputy Minister in his role as accounting officer. In particular, the Act requires that Deputy Ministers ensure an internal audit capacity adequate to the needs of the Department and establish an audit committee. Furthermore, the Act stipulates that all federal departments conduct reviews of the relevance and effectiveness of each ongoing program of grants or contributions every five years.

Central Agency Priorities

The Treasury Board Policy on Internal Audit, which comes into full force on April 1, 2009, requires departments to establish and maintain effective and independent internal audit functions. The Policy sets out specific requirements with respect to governance and the role of internal audit, including the requirement for a holistic opinion to the Deputy Minister by the Chief Audit Executive on departmental controls, governance and risk management, as well as adherence to the standards of the Institute for Internal Auditors (IIA).

The Government has introduced a new Expenditure Management System with a greater focus on results. Under this new approach, the President of the Treasury Board is leading strategic reviews of all departmental spending. These reviews are about better management and ensuring that all government spending is aligned with the priorities of Canadians. Evaluations will play a key role in these reviews while continuing to inform program improvement and stronger performance measurement.

Departmental Priorities

While Environment Canada will continue to provide a wide range of valuable products and services for Canadians, including environmental research and weather information, focusing the Department's efforts on a number of key priorities will ensure that it achieves real environmental outcomes that benefit Canadians. The Government has identified several key areas for action by the Department:

  1. Reducing greenhouse gas emissions and air pollution, including implementation of Canada’s Clean Air Act
  2. Ensuring water quality and quantity, with a focus on priority ecosystems such as the Great Lakes
  3. Supporting clean land and biodiversity, including the cleanup of contaminated sites and brownfields
  4. Protecting Canadians from toxic substances, including implementation of the Chemicals Management Plan

3.2 Risk Assessment

As part of the annual audit and evaluation planning process, the Audit and Evaluation Branch conducted a risk assessment to identify key areas and activities that could significantly influence overall management priorities, performance, and achievement of corporate objectives.

The assessment began with a comprehensive review of corporate-level information from many different sources including the following:

-   Results of previous risk assessment conducted by AEB, covering all departmental Outcome
    Project Groupings (OPGs) and Outcome Project Plans (OPPs) pertaining to the OPGs assessed as
    having a high level of risk5;
-   2007–2008 Report on Plans and Priorities describing Environment Canada’s priorities, key risks and
    challenges;
-   The corporate risk profile for 2007 outlining key risk areas for the Department;
-   TBS assessment of Environment Canada’s performance against the Management Accountability
    Framework (MAF) for 2006 identifying several areas for improvement.

Annex A of the attached Risk Assessment Report provides a more extensive list of the documents reviewed.

Risk areas were identified as either related to “enabling activities” or “policy and program activities.” The latter refer to actual program and policy activities for delivering on departmental environmental outcomes such as clean air and biodiversity. The former refer to those activities that support policy and program activities such as finance, information management, information technology and human resources.

A rating scale of high, medium and low was developed to assess the impact and the likelihood of each risk. For the purpose of assessing the impact, the following five criteria were used:

-   Materiality – e.g., financial resources, program expenditures
-   Reputational – e.g., public and media interest or expectations, corporate reputation, domestic and
    international reputation, political factors
-   Complexity – e.g., internal operations, multiple partners, shared attribution/accountability
-   Damage and liability – e.g., effect on people’s health, well-being and safety
-   Capacity to manage and deliver – e.g., human resources capacity, program integrity issue

A more detailed description of the rating scale is included in Annex B of the attached Risk Assessment Report.

Top Ranked Risk Areas

Key enabling activity and policy and program activity risk areas that emerged from the analysis were organized by the Management Accountability Framework (MAF) elements. Key risk areas were then superimposed on a risk map depicting their level of impact and likelihood using the TBS Risk Management Model. The analysis revealed that of the 29 key risk areas identified, 18 are rated as high risk areas. They are as follows:

 
Policy and Program Activities Enabling Activities
  • Air Quality & Climate Change
  • National & International Commitments
  • Water Quality
  • Toxic Substances
  • Greening Operations
  • Occupational Health & Safety
  • Human Resource Capacity 
  • Financial Reporting
  • Financial Planning/Budgeting
  • Financial Capacity
  • Assets Management
  • Information Technology
  • Information Management
  • Employment Equity
  • Accountability & Responsibility
  • Communications
  • Human Resource Planning
  • Performance Measurement

A more detailed description of the high risk areas and ranking is provided in Annex C of the attached Risk Assessment Report.

3.3 Identification and Prioritization of Projects

The list of planned audit engagements and evaluation projects for the next three years was established based on the results of the above risk assessment as well as the following considerations:

  • The dates and results of the last audit engagement, evaluation or review;
  • Evaluation projects required by Treasury Board Secretariat for renewal and/or as part of commitments made in Treasury Board submissions;
  • Evaluation of grants and contributions required under the Federal Accountability Act;
  • Evaluation projects being led by other departments which involve Environment Canada programs;
  • Horizontal audits planned by the Office of the Comptroller General (OCG);
  • Audit engagements and evaluation projects identified for 2008–09 in last year’s plan;
  • External audits and studies already carried out and planned by the Office of the Auditor General, the Commissioner of the Environment and Sustainable Development, the Public Service Commission, the Access to Information Commissioner, and the Commissioner of Official Languages; and
  • Requests by Boards and senior management.

Consultations were conducted with departmental Boards to validate results of the risk assessment, discuss the potential list of internal audit engagements and evaluation projects and to obtain advice on the priority areas as well as the potential scope and timing of specific audits and evaluations.

Appendix A provides a summary table of the internal audit engagements and evaluation projects mapped to the relevant risk areas. The table also indicates how the plan covers high risk areas over the course of the next three years.


5 The latest version of departmental OPGs and OPPs is dated October/November 2005.

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