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Audit and Evaluation Annual Report 2009–2010

1 Introduction

1 Introduction

The audit of the National Hydrometric Program was included in the departmental Audit and Evaluation Plan 2009–2012 as approved by the Deputy Minister, upon recommendation of the External Audit Advisory Committee. The rationale for this audit is explained by the complexity of the program with respect to its management structure, network size, capacity and sustainability. The content of this report reflects the document review and interviews performed during the audit. This report presents the audit observations validated during exit briefings with management, along with an audit opinion and recommendations.

1.1 Background

The National Hydrometric Program provides for the collection, interpretation and dissemination of real-time and historical surface water level and flow data to Canadians--information that is vital to meet water management needs and environmental needs across the country and that is required as a basis for economic and social development.

The National Hydrometric Program is part of the Meteorological Service of Canada, and is ISO 19001 compliant. It is managed through a national partnership between the federal, provincial and territorial governments. Since 1975, the program has been carried out under formal cost-shared agreements signed between Environment Canada and each of the provinces, and between Environment Canada and INAC (representing the territories), as per the Canada Water Act. It utilizes a centralized, standardized approach to data collection, processing and distribution, with costs shared according to specific interests and needs. The federal component of the collective partnership is commonly known as the Water Survey of Canada. The program has been continuously operated, in general, by the federal government (i.e., Water Survey of Canada) since 1908, except in Quebec, where the province took over the responsibility in 1963.

The Constitution Act, 1867 does not specifically assign jurisdiction over water or the environment to the provinces or the federal government. As such, the provinces and the federal government share jurisdiction over such matters through their respective powers. The federal government’s authority for participating in water resources management is specifically reflected in the following: the International Boundary Waters Treaty Act (Canada–United States ); the International River Improvements Act; the Fisheries Act; the Navigable Waters Protection Act; the Canada Water Act; and certain aspects of the Canadian Environmental Protection Act, 1999.

Under the 1975 agreements, Environment Canada has taken a leadership role in the National Hydrometric Program, which has resulted in a national network generating accessible and reliable water quantity data and information for Canadians. This partnership has been of benefit not only to the country but also to the provinces and territories. As a result, efforts have been made by all jurisdictions to renew and modernize the 1975 agreements to reflect current and emerging roles and needs.

Almost every sector of a nation’s economy has a requirement for water information. Further explanation about these major user communities is provided in section 1.2 of this report.

The co operative nature of the National Hydrometric Program has allowed flexibility to adapt to the changing needs of water management in each part of the country. It has also advanced the commitment of the Parties to maintain national standards, develop hydrologic expertise, implement efficient, modern technology, and provide water resource data and information to all those who need it. Co operation also helps to address the emerging needs for environmental conservation and protection.

Currently, there are 2865 water level and stream flow stations being operated under the federal-provincial/territorial cost-sharing agreements. Data for 1456 of the 2865 active stations are transmitted in near real-time. Data from an additional 5577 hydrometric stations no longer active are stored with the active station data in the national hydrometric database (HYDAT). Most of the stations are located in the southern half of the country, where the population and economic pressures are greatest. As a result, the adequacy of the network in describing hydrologic characteristics, both spatially and temporally, decreases significantly to the north.

1.2 Why the National Hydrometric Program is Important

Reliable data and information concerning the levels and flows of Canada’s lakes and rivers are critically important to continued economic prosperity, the sustainable management of the environment, and the health and safety of Canadians. The National Hydrometric Program provides Canadians with timely, easily accessible water quantity data relevant to the economic prosperity and quality of life of all Canadians. This information is utilized by all Canadians 24 hours a day, every day, and continues to be an important factor in reducing the impacts on society resulting from hazardous weather and environmental conditions. Hydrometric information is also required to effectively support policy issues such as: water availability for economic development in different regions; industrial and municipal water use and future development; flood and drought warning and situation management; infrastructure development (bridges, dams, culverts, sewage treatment facilities, etc.); green energy production; water export; and understanding the impact of climate change.

Additionally, Canada’s international commitments as a member of the World Meteorological Organization require the sharing and exchange of meteorological and hydrometric data. There are also legal obligations under the International Joint Commission to exchange water data from stations along the Canada–U.S. border. Canada has also committed to provide data for inter-jurisdictional bodies, such as the Prairie Provinces Water Board and Ottawa River Regulation Board.

As previously explained, the water information is important for many sectors of the economy. The four major user communities that need the most hydrometric data and information are as follows:

  • Structural designers who use hydrometric data to optimize the design of various types of hydraulic structures such as bridges, culverts, pipeline crossings, dams, reservoirs, dykes and other flood protection works, irrigation and drainage schemes, and other various water-related industrial structures.
  • Those responsible for emergency management in the area of flood prediction and avoidance, whose goal is to reduce flood damage through flood warnings or to avoid flood damage completely.
  • The resource-use community, which needs hydrometric data for day-to-day operations. Examples of such sectors include: water supply and sewage disposal, agriculture, forestry, transportation, hydroelectric generation, mining, oil and gas, fishing, trapping, and eco-tourism.
  • Government and/or resource and environmental management communities who require water quantity information for biodiversity and habitat assessment and stewardship, water quality research and development, treaty obligations regarding apportionment, and integrated environmental prediction activities generally, such as climate change. International commitments include the World Meteorological Organization standards for network density and the Global Climate Observing System.

Throughout this report the term “client” is used to represent the above groups of users.

The hydrometric information has serious and far-reaching financial and social implications, and should be based on the best possible data.

1.3 Risk Assessment

A preliminary risk assessment of the National Hydrometric Program was carried out to identify the possible areas and levels of risks. The Risk Assessment Tool developed by the Office of the Comptroller General of Canada for the guidebook Internal Audit Planning for Departments and Agencies, 2008 was used to assess the risks.

Each major area of the program was looked at through the following risk domains and categories:

  • Strategic Risks: organizational change; strategic oversight and direction; and stakeholder engagement.
  • Operational Risks: human resources; third party; knowledge capital; capital infrastructure; information technology infrastructure; legal and compliance; internal fraud; external fraud; business processes.
  • Hazard Risks: natural hazards; human actions–intentional; human actions– unintentional.

In addition, each major area of the program was looked at through the following risk factors: degree of change and how recent the change is; complexity; legislative and other compliance requirements; knowledge required; and degree of dependencies.

Related documentation was reviewed, such as the Canada Water Act and the Agreements on Hydrometric Monitoring between different levels of government and Environment Canada, as well as policies and directives. Further, interviews were conducted with management from the National Hydrometric Program to gain an understanding of the legislative requirements, objectives, priorities and governance of the program, and to identify the possible risks and controls in place. In that context, the following persons were interviewed: the Assistant Deputy Minister, Meteorological Service of Canada; the General Director, Weather and Environmental Monitoring; and the Acting Director, Hydrometric Monitoring.

Two primary risks were identified for the purpose of this audit: the governance of the program, and the network configuration and alternative program delivery methods.

The internal and external governance of the program is complex, due to the number and diversity of the stakeholders involved: federal, provincial and territorial governments, other government departments, municipalities, and the private sector. As a result, the decision making process among these stakeholders regarding setting directions, establishing priorities and deciding on investments is multi faceted and not fully clear. Also, the audit team was informed that the multiple reporting structures require a high level of coordination, which is not satisfying all Parties. Coordination is required between the following:

  • Weather and Environmental Operations in Environment Canada, responsible for budgeting and delivering the program with the regions, and Weather and Environmental Monitoring, which sets functional direction.
  • Two components of water management in Environment Canada: the water quality component of the Science and Technology Branch, which reports to the Ecosystem Sustainability Board, and the water quantity component of the Meteorological Service of Canada, which reports to the Weather and Environmental Services Board.
  • Environment Canada and INAC.

As a consequence, there are two sets of agreements between the federal, provincial and territorial governments, one for water quality and one for water quantity.

From the sustainability perspective, program managers are concerned that the current size and structure of the hydrometric network is insufficient to meet Canada’s needs and that the ability to maintain a coordinated water monitoring program may be in serious jeopardy, more precisely the ability to:

  • maintain a coordinated National Hydrometric Program;
  • meet the challenges identified in the face of a changing climate and increased human impacts on water resources; and
  • satisfy the needs of watershed managers in small to medium size basins, and address the development and ecological pressures in the north and other remote regions of Canada.

For instance, there are only two active stations in the northern arctic ecozone, and one in the arctic cordillera, and these are operated as federal or federal/provincial stations. It is recognized by program specialists that the freshwater contributions to the Arctic Ocean are not currently well defined, and calculations have not been adequately assessed with the level of monitoring in place.

Program managers also believe that global hydrometric needs have not been optimally met through alternative program delivery methods. There is considerable documentation describing the data and information deficiencies required to meet the broad range of demands on the National Hydrometric Program, such as:

  • the Canadian Water Resources Association’s numerous workshops and conferences;
  • two comprehensive national assessments, Threats to Sources of Drinking Water and Aquatic Ecosystem Health in Canada (2001) and Threats to Water Availability in Canada (2004);
  • numerous hydrometric network analyses completed by the provinces and federal government (Kangasniemi and Miles 2003; Pyrce 2004; AMEC 2005; Terripan Consultants 2006) (Annex 4, reference number 5).

The business case presented on June 15, 2006, and accepted by Environment Canada’s Weather and Environmental Services Board, also concluded that user needs have not been optimally met. It is now considered an unfunded pressure within Environment Canada. At this point, the National Hydrometric Program does not operate according to the principles outlined in the business case, but rather under the principles outlined in the Agreements on Hydrometric Monitoring and the ISO architecture.

The overall concern is that the current decision making and management configuration of the program is not as well designed as required to address many of the challenges identified in the face of a changing climate and increased human impacts on water resources. It is evident that social, economic and public policy considerations have played a large part in the development of the hydrometric network in Canada. The current network is not a scientifically designed network but rather a network of opportunity driven primarily by the needs of water managers and Parties, and has evolved based on information available at the time. Access costs have also influenced the network configuration, with stations located in more populated areas where there is road access. Many stations are located for specific needs rather than meeting a scientific or overall water resources planning purpose. The number of hydrometric stations in Canada that can meet science and planning needs, particularly for climate variability and change analysis, is therefore much less than the total number of stations in the national network.

Further, it may not satisfy the needs of watershed managers in small to medium size basins, or address the development and ecological pressures in the north and other remote regions of Canada. The question is being asked: Is there a need to consider other methods of service delivery, including more uses of modelling as opposed to measuring real data?

1.4 Objectives and Scope

Based on the conclusions drawn from the risk analysis, the objective of the audit is to provide assurance on the adequacy of the following:

  1. The internal and external governance of the hydrometric network, looking in particular at the committee architecture, decision making process, reporting structure and the centre of control.
  2. The current hydrometric network configuration and delivery approaches, compared to its size, capacity and sustainability. This includes:
    1. looking at the business case submitted to the Weather and Environmental Services Board in 2006, though it is now considered an unfunded pressure within Environment Canada;
    2. assessing the complexity of the National Hydrometric Program, its sustainability, and the capacity of the current configuration to meet Canada’s needs and international obligations;
    3. exploring an optimum hydrometric network, through the comparison of the National Hydrometric Program with those of other countries, and consideration of service delivery methods, such as more uses of modelling as opposed to measuring real data.

The scope is Department-wide and focuses on the Environment Canada governance and configuration of the National Hydrometric Program as it existed at the time of the audit. It does not cover the management performed by the other jurisdictions (provinces, territories or municipalities) or the National Water Quality Monitoring Program.

1.5 Methodology

The audit was conducted in accordance with the Treasury Board Policy on Internal Audit and included the following phases: planning; conduct; debrief to the National Hydrometric Program management and key Parties; and reporting. The planning phase consisted of interviews and consultation with program managers; in-depth analysis of background information; conduct of the preliminary risk assessment; and development of an audit program and associated tools. To assess the governance of the program, the audit team used recognized governance models, frameworks and indicators from national and international institutions in order to derive the audit criteria. The governance models used are shown in Table 1.

Table 1: Governance models used in the audit
InstitutionsGovernance Models
Governance InternationalThe Good Governance Model (2008)
World BankA Decade of Measuring the Quality of Governance (2007)
Worldwide Governance Indicators (1996–2007)
Assessing Governance: Diagnostic Tools and Applied Methods (2002)
Institute of Internal AuditorsOrganizational Governance, Professional Guidance (2008)
Canadian Institute of Chartered AccountantsCoCo Model: Guidance on Control, which presents a control model referred to as Criteria of Control (CoCo) (1995). Used for this audit: the Effectiveness and Efficiency of Operations aspect.
Office of the Auditor GeneralGovernance Framework and excerpts from various Auditor General’s reports
Treasury Board SecretariatManagement and Accountability Framework

Based on these models, the audit team selected the criteria to assess governance as shown in Table 2, along with their correspondence with the appropriate seven of the ten elements of the Management and Accountability Framework, which sets out the Treasury Board’s expectations for good public service management.

Table 2: Criteria used to assess governance
Dimensions of GovernanceCriteriaCorrespondence with the Management and Accountability Framework
1. Program’s Objectives and StrategiesClear and understood         Policy and programs
In line with mandate
2. Authority & ResponsibilityParticipation and delegation Governance and strategic Directions
3. Decision MakingOpen and transparentGovernance and strategic directions
Based on effective, efficient and negotiated rules
4. Performance and AccountabilityAccountability regimeAccountability
Performance assessmentResults and performance
Clients’ satisfaction assessmentCitizen-focused service
5. Internal and External RisksIdentified, monitored and managedRisk management
6. Exchange of InformationSufficient, complete, timely, accurateGovernance and strategic directions
7. Learning and InnovationContinuous improvement strategyLearning, innovation and change management

The assessment of governance involved extensive and in-depth analysis of program documentation, as listed in Annex 3, along with interviews in June 2009 with 20 senior managers and representatives from the National Hydrometric Program, the NAT and the NHPCC. The sample selected for the interviews covered all Parties of the program as shown in Table 3. A list of those interviewed is provided in Annex 5.

From interviews, each observation has been recorded in relation to the relevant criteria and analyzed accordingly. During the summer and fall, the audit team corroborated and validated each observation with written evidences from the documentation listed in Annex 3, which represents more than 170 documents. The documentation reviewed included annual reports, minutes of meetings spanning five years and covered by 88 documents, business plans, business cases, public surveys, briefing notes, federal-provincial Agreements on Hydrometric Monitoring, the Office of the Auditor General reports, the Handbook/Guideline: Implementing the Weather and Environmental Services Quality Management System (Annex 3, reference number 24), stakeholder reports, and certain Acts such as the Canadian Environmental Assessment Act, Dominion Water Power Act, Northwest Territories Waters Act, and Canada Water Act.

The assessment of the network configuration/sustainability was performed by a reputable expert advisor in the water management field. The work performed included extensive technical and scientific document review, as listed in Annex 4; consultations with stakeholders and Parties of the National Hydrometric Program; benchmarking and comparison with the hydrometric programs of other countries, especially the G9 countries; and expert advice and assessment. Consultations were carried out between the end of July and end of September 2009, with a selection of 27 stakeholders representing provincial and territorial government Parties, program managers from Environment Canada, hydropower utilities, university researchers, private developers and water resources consultants, as shown in Table 3. A list of those interviewed is provided in Annex 6.

Table 3: Sample for audit objectives I & II

Preliminary observations on governance were submitted to the program management, NAT and NHPCC at their annual meeting in September 2009, and on the network configuration to program management later in the fall, for factual review and comments.

1.6 Statement of Assurance

This audit has been conducted in accordance with the International Standards for the Professional Practice of Internal Auditing and the Policy on Internal Audit of the Treasury Board of Canada.

In our professional judgement, sufficient and appropriate audit procedures have been conducted and evidence gathered to support the accuracy of the conclusions reached and contained in this report. The conclusions were based on a comparison of the situations, as they existed at the time, against the audit criteria.

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