Treasury Board Secretariat policy on Delegation of Authorities stipulates that "though appointment of a new minister does not automatically nullify existing delegation of authorities, departments must prepare a new document of delegation as quickly as possible for the new minister's approval." Although the delegation instrument was approved shortly after the appointment of the current minister, it was never posted on the intranet. In fact, up to November 2007, when a revised delegation instrument came into effect, the delegation tool on the Web was the one implemented by the previous minister. The audit noted that there is currently no formal or documented process that describes the different steps to update the delegation instrument when a new minister is appointed. A documented process would provide such guidance.
The Department has implemented a centralized process where all specimen signature records are now validated, saved on a share drive and available for viewing on-line. This centralized process is certainly an improvement over past practices under which each region had its own process for completing specimen signature records. Currently, the on-line tool is mainly used to authenticate signatures by accounts verification staff. Finance should explore the possibilities of an interface between the Department's financial system and the specimen signature record on-line tool.
The process to delegate signing authority on an acting basis is viewed by managers as quite cumbersome and time consuming. First, the requirement for employees to complete a five-day course and the on-line assessment from the Canada School of Public Service is viewed as quite costly. In addition, incumbents delegated with acting authority must complete a specimen signature record every time they are delegated authority and obtain a wet signature for approval. Frequently, the supervisor authorizing the delegation is physically located in another region. Therefore, approval could be obtained after the end of the acting period. These requirements discourage most managers from delegating their authority downward. Many of them have mentioned that they don't delegate any more and instead ask their immediate supervisor to approve things when they are absent from the office. This practice could lead to inefficiencies in day-to-day operations.
Furthermore, acting assignments provide opportunities for middle managers to develop managerial skills. Unfortunately, the current practice with respect to acting delegated authorities may be limiting these opportunities.
Financial Policy and Operations, Delegation Office is currently developing an acting delegation tool. This new tool will enable delegating supervisors to activate an acting delegation request if a proper acting delegation specimen signature record is in place. An acting specimen signature record will need to be completed only once a year.
The responsibility for communicating changes regarding the delegation instrument belongs to Financial Policy and Operations and, more specifically, to the Delegation Office. As a general rule, the information is forwarded to regional accounting offices that in turn forward the information to appropriate individuals. Each region proceeds differently in relaying the changes. Some regions forward the information directly to the delegated employees while others forward the information to the administrative assistants in the programs.
Communicating changes in a timely manner is of the utmost importance. Incidentally, we have observed some gaps in this regard. Thus, the deferral of the new delegation's effective date was not communicated to delegated managers. Consequently, they operated under an unapproved delegation for approximately a month. This situation also had repercussions on regional accounting offices: not knowing what to do, they authenticated transactions using either the new or the old specimen signature records. We also noted that changes to the delegation approved in November took nearly two months to be communicated to delegated managers.
The audit noted that a unique national finance website is still in the making. Although most regional finance websites are now redirecting users looking for financial policies to the national Finance website, some regions choose to maintain their own financial website. Having different sources of information increases the risk of inconsistencies in the adherence and application of policies and procedures. In fact, the results of the interviews indicated that managers are sometimes receiving conflicting information regarding business processes, depending on where they obtain the information. Furthermore, the cost associated with maintaining multiple sources or websites should be taken into consideration.
The interviews conducted indicated that, in general, managers have an adequate level of understanding of their delegated authorities and what they are accountable for. In fact, all the managers interviewed had completed the Authority Delegation Assessment from the Canada School of Public Service before being authorized to exercise their delegated authority. On the other hand, the interviews indicated that there is no requirement for incumbents with functional authority or accounts verification staff to undergo formal training. The observations of transactions processing revealed that accounts verification officers do not have a clear understanding of the different types of authorities. Staff, if improperly trained, could impair the effectiveness of the controls.
Many delegates have expressed an interest in receiving a half-day refresher course on a yearly basis. The training should be practical and geared to the appropriate audience.
The Director General, Finance Directorate should
The Financial Policy and Operations Division is responsible for implementing and reviewing financial management policies and the delegation of financial signing authorities instrument. These responsibilities are shared between two groups. One is in charge of the delegation instrument, including the implementation and review of relevant policies and procedures. The other is responsible for all other financial management policies. Our audit revealed a need for improvements to make these policies adequate and up to date.
There are currently very few internal policies or procedures in place to strengthen and implement Treasury Board Secretariat policies. At the time of the audit, the group responsible for establishing and reviewing financial management policies and procedures consisted of two individuals. Considering the few resources allocated to this section, the Department did not develop internal policies and procedures for interpreting and clarifying Treasury Board Secretariat policies.
To address this gap, regional offices have developed internal procedures based on their own interpretation of Treasury Board Secretariat policies. These procedures, which are not subject to national headquarters approval, are often inconsistent from one regional accounting office to another. The policy group confirmed that additional resources have been obtained and that two more employees will soon be joining the team. The mandate of this group is to offer support to the community. As a first task and in consultation with regional offices, they will be compiling a list of existing processes and procedures and developing internal policies and procedures where required. Training will also be one of their priorities, as it will help improve managers' awareness and sense of responsibility with respect to compliance with policies.
The group responsible for the delegation of financial signing authorities instrument was created approximately a year and a half ago. The group consists of two individuals, one of whom is full time. The full-time employee is responsible for the final validation of all specimen signatures and for saving them on the shared drive. According to the interviews, the full-time employee does not have a back-up in case of absence. This situation could have an impact on the continuity of operations.
Treasury Board Secretariat policy stipulates that "Departments must review and update all delegated authorities, including electronic delegation matrixes, specimen signature documents and validation and authentication processes...at least annually." While the delegation of authority of some types of expenses (travel, hospitality, membership and contracts) were reviewed as part of the business process improvement in 2007, the interviews established that there is no systematic annual review or update of the delegation instrument: it is normally reviewed and updated only when required or when a new minister is appointed. Although this practice does not pose a high risk to the Department, the implementation of a formal documented process outlining the roles and responsibilities, the frequency and timing of changes and the steps to follow would allow for better management of the delegation instrument. In fact, a review of the Specimen Signature Online User Guide revealed that it contained information that is no longer valid.
Although recent changes to the delegation instrument were communicated to managers via email, they are not reflected on individual specimen signature records. For example, Part A -- Summary Chart of the delegation instrument dated November 2007 shows that staffing authorities for generic Level 5 managers were revised downward. This change is not reflected on the specimen signature records. During the interviews with delegated managers, we witnessed them referring to their specimen signature record to verify whether they have a particular delegated authority. Therefore, although the changes have been communicated, there is a risk of managers approving transactions for which they have no authority or rejecting transactions that they are authorized to approve.
The Director General, Finance Directorate should
Regional accounting offices are responsible for monitoring compliance with financial management legislation, policies and authorities. This is done through the verification of transactions selected through the statistical sampling (a regional and a national sample are pulled by national headquarters on a monthly basis) and a 100-percent verification of high-risk transactions such as travel expenses, lodging expenses, subscription fees, acquisition cards, etc.
Employees assigned to accounts verification generally have more than one year of relevant experience. However, as mentioned previously, most of them have never received any formal training in accounts verification. They have received on-the-job training. This limits their ability to fully understand their work: for example they have difficulty understanding the difference between sections 32, 33 and 34 of the Financial Administration Act. When the auditors asked them to demonstrate how they could tell whether an individual was authorized to grant an approval under a specific section of the Act, they were unable to indicate on the specimen signature record where they could verify it.
Monitoring of compliance with financial management legislation includes the authentication of the person who authorizes the transaction. In order to ease the process of authentication, the Delegation Office has centralized all specimen signature records on a shared drive and these records can now be viewed by all accounts verification officers. The interviews with accounts verification officers noted that they rarely refer to the shared drive to authenticate a signature. Instead, they rely on their memories because they feel they know their clients' signatures by heart. Some officers even mentioned referring to hardcopies of specimen signature records. This practice is unadvisable because the officer might validate a signature against an invalid specimen signature record. In fact, the audit revealed that one officer used an outdated specimen signature record while the correct one was available on the shared drive. We also noted that, when authenticating the transaction, the officers tend to verify the signature and the generic level only and do not refer to the specific authority. They do not realize that the authorities on the record may be more restrictive than the generic authorities.
Furthermore, the results of monitoring activities are not always shared with senior Finance management. Errors detected as part of the statistical sampling accounts verification are consolidated and reported to management on a monthly basis. However, errors detected as part of the accounts verification of the remaining transactions are not consolidated or reported. This exercise would provide an indication of the type of errors arising nationwide and assist in identifying appropriate corrective measures. Furthermore, senior management could use these results to determine how to change existing controls and ensure that risks are managed appropriately. In addition, the fact that these results are not shared with upper levels detracts from their strength and credibility. The Federal Accountability Act stipulates that the deputy head is accountable for measures taken to maintain effective internal control mechanisms. Therefore, follow-up results must be monitored to ensure that existing controls are efficient, effective and operational at all times.
Finance headquarters is currently establishing a nationwide quality assurance framework. This process -- which is meant to be independent of the sampling policy under section 33 and of Finance's accounts verification -- should enable the Department to ensure the relevance and quality of accounts verification at Environment Canada.
The Director General, Finance Directorate should
The regions have informed the auditor of some best practices that Finance headquarters should explore to determine whether all regional accounting offices could benefit from them.