Review of Regional Governance Processes over Investment Management (Final Report)
October 11, 2016
On this page
- Definition of an internal audit and review
- Review objective and scope
- Review criteria
- Review approach
- Regional governance processes: Overall results
- Regional control processes: Overall results
- Governance processes
- Control processes
- Continued evolution of governance processes
- Management response
Investment planning and management in the Government of Canada is primarily guided by two Treasury Board policies:
Within Public Services and Procurement Canada, investments can be divided into two categories:
Activities with specific time frame, cost and performance parameters. Approval for departmental projects are governed by the Policy on the Management of Projects noted above. The delegated authority for approval of a project is based upon a complexity assessment of the project.
Ongoing operations and maintenance. Approval for internally acquired services by the department is based on the dollar value of the acquired service and the established delegated authority within the department.
Integrated Investment Plan
Public Services and Procurement Canada created the Integrated Investment Plan to address the Treasury Board's policy requirements on investment planning. The purpose of the plan is to link investments to those priorities which support the department's strategic outcomes and provide details on its major investments.
The Integrated Investment Plan for fiscal year 2015 to 2016 through 2019 to 2020 includes $15.3 billion in planned investments over 5 years, which is within the department's available budgets. Of this, $13.1 billion is forecasted for acquired services and $2.2 billion is for approved projects.
In the plan, spending on projects and acquired services are allocated by program. The plan further categorizes projects by branch and region (including the National Capital Area and Engineering Assets); however, planned investments in acquired services are only identified at the branch level and not at the regional level.
Only projects with a cost greater than $1 million are classified as projects in the plan. Projects with a value below $1 million are not included in the plan and are approved based on standard delegation of authority. The rest of the plan is made up of acquired services.
Governance and oversight
Depending on whether an investment is a project or an acquired service, a different governance and oversight framework is applied.
The governance and oversight structure for projects is made up of committees at the regional, director general, assistant deputy minister, and deputy minister levels. Projects are reviewed through the committee structure, starting at the regional level (if applicable), moving to the branch level and concluding at the Investment Management Board. Please consult the following exhibits for more details:
- Exhibit 1—Investment projects: Governance and oversight structure
- Exhibit 2—Roles and responsibilities of the investment projects governance committees
Projects that initiate in Public Services and Procurement Canada's regions feed into the committees noted above, and also undergo additional review at the regional level before the projects are passed on to headquarters.
This process is completed for regional projects by all departmental regions, including the National Capital Area and Engineering Assets.
Exhibit 1—Investment projects: Governance and oversight structure
This diagram identifies the various levels of review for regional investment projects that are included in the Integrated Investment Plan. The project review process starts with the Regional Sub-committee or technical experts, the Regional Real Property Owner-Investor and the Regional Finance Management Advisor. It then flows up to the Regional Investment Management Board or equivalent committee and then to the Regional Delegated Authority. At this point, review is done by the Parliamentary Precinct Investment Board, the Real Property Investment Board, the Information Management and Technology Steering Committee and other branch management committees. It may flow to the Financial Management Committee for review, and then return to the Director General Committee on Investment Planning. The review process ends with the Investment Management Board.
Exhibit 2—Roles and responsibilities of the investment projects governance committees
The following identifies the specific roles and responsibilities of those responsible for the various review steps noted in exhibit 1. It includes the roles and responsibilities for review steps that take place in the regions as well as headquarters.
Investment Management Board
- Provides oversight at the departmental level
- Ensures investments support priorities
- Monitors risks and performance of investments
- Supports the Deputy Minister in informing the Minister of sensitive issues pertaining to the Integrated Investment Plan
- Provides project approval for the plan's inclusion for high-risk projects
Finance Management Committee
- Reviews total spending on projects and acquired services to ensure affordability of the recommended investments and completeness of the plan
Director General Committee on Investment Planning
- Ensures investment planning is integrated and consistent across the department
- Implements continuous improvements to the plan's processes
- Reviews projects that are recommended by the branch or program priority setting committee
Branch or program priority setting committee
These committees include the Real Property Investment Board, Parliamentary Precinct Investment Board and Public Services and Procurement's Canada's Information Management and Technology Steering Committee.
- Provides project approval for the plan's inclusion for low-risk projects
- Reviews and provides recommendations on high-risk investment projects
Regional Delegated Authority
- Conditionally approves conditionally projects once the project has been recommended for approval by the Regional Management Investment Board
Regional Investment Management Board
- Reviews the regional project and recommends it for approval, allowing it to be sent to the Real Property Investment Board for review
Regional Sub-Committee or technical experts
- Reviews the technical details of the project before the project is reviewed by the Regional Investment Management Board
- Provides strategic and functional guidance to project leaders responsible for project approvals
- Ensures options analysis is conducted
Regional Financial Management Advisor
- Performs a due diligence review of the financial components of the proposed project
- Completes an attestation document on the financial component of the project that is signed off by the Regional Director of Finance
Regional Real Property Owner-Investor
- Reviews the details of the project before it is sent for review by the Regional Financial Management Advisor and regional committees
The governance process for regional projects has been evolving since the initiation of the Integrated Investment Plan. During the timeframe of our review, the regions' projects under the plan were sent to Real Property Branch's National Portfolio Management within headquarters where the project entered the headquarters portion of the plan's process. This has since changed and regions send their projects under the plan to Finance and Administration Branch's Office of Investment Management for the headquarters portion.
|1 or 2||Less than $20 M||Regional Director General|
|1 or 2||More than $20 M||Assistant Deputy Minister, Real Property Branch|
Acquired services in the plan are forecasted future acquired services, which, when acquired, will be acquired through one of Public Services and Procurement Canada's three acquisition services mechanisms:
- contracts within Public Services and Procurement's delegated authority
- contracts above Public Services and Procurement's delegated authority
- Real Property leasing
Each of these mechanisms has their own oversight mechanisms in place, which include:
- assessing the risk level of the acquisition
- applying varying levels of management oversight based on the risk level
- applying the delegation of authority based on the dollar value of the acquisition to control approvals
The department is currently developing an oversight framework for acquired services to integrate the identification and reporting of high-risk acquisitions from each of these mechanisms to the plan's governance committees.
We were advised that, unlike projects, there is no regional involvement in the plan's process for acquired services. Forecasted regional spending on acquired services is not tracked or budgeted for separately on the plan. Instead they are rolled up into overall spending across the department's branches.
Definition of internal audit and review
Provides a reasonable level of assurance by designing procedures so that the risk of an inappropriate conclusion being drawn based on the audit procedures performed is reduced to a low level. This includes inspection, observation, inquiry, confirmation, recalculation, re-performance and analytical procedures.
Provides a moderate level of assurance by designing procedures so that the risk of an inappropriate conclusion being drawn based on the review procedures being performed is reduced to a moderate level. Procedures are normally limited to inquiry, analytical procedures and discussion. Risk is reduced to a moderate level when the evidence obtained enables us to conclude that the subject matter is plausible in the circumstances.
Review objective and scope
To determine if regional governance and control processes are sufficient, appropriate, and being consistently applied to ensure the effective management of investments.
The review focused on investments that originated in the regions, National Capital Area and Engineering Assets, and were included in the Integrated Investment Plan for fiscal year 2015 to 2016 through 2019 to 2020.
As only projects on the plan have a specified regional governance process, the review focused on the governance and control processes for regional projects. As there is no regional involvement with the acquired services portion of the plan, and as regional acquisitions go through the standard delegation of authority process, acquired services were excluded from the scope of this review.
The review criteria were derived from the results of the risk assessment. Risk areas with risk levels of moderate and above were included in this review. The criteria were developed based on guidance from the Treasury Board Secretariat's Management Accountability Framework, the National Project Management System Policy, the Policy on Integrated Risk Management, the Policy on Investment Planning, and the Integrated Investment Plan Procedural Handbook. We would expect that the following elements are in place and appropriate:
Review criteria for governance processes
Oversight bodies are established and effectively provide strategic direction and oversight for regional Integrated Investment Plan projects.
- Oversight bodies are established to ensure effective management over regional investments
- Oversight bodies provide strategic direction and oversight over regional investments
- Roles, responsibilities, and accountabilities of the oversight committees related to the Regional investments are sufficient, and have been defined, documented, and fulfilled
- Formal monitoring and reporting mechanisms are in place to provide oversight committees with timely information that allows them to monitor the progress of regional investments, and compliance with policies and procedures
Review criteria for control processes
- The regions follow a sufficient, appropriate and documented process for Integrated Investment Plan projects, and the process is consistently applied
- A sufficient, appropriate, and documented process is in place and followed for regional investments
- Regional processes for the Integrated Investment Plan projects are consistently applied to Integrated Investment Plan investments within the regions
The review covered the period from April 2015 to March 2016. We also discussed with the regions, including the National Capital Area and Engineering Assets, those changes that were made to the governance process subsequent to the time period reviewed.
Interviews were conducted with key officials in each region responsible for the Integrated Investment Plan process. Documentation related to the plan's process was examined, including but not limited to:
- regional Integrated Investment Plan process maps
- terms of reference for the regional investment management boards
- records of decision and meeting minutes for all regional investment management board meetings in each region for the 2015 to 2016 fiscal year
- the Integrated Investment Plan
- investment analysis reports
- evidence of technical review
We randomly selected one project from each region, which had been included in the plan in the Integrated Investment Plan for fiscal year 2015 to 2016. The review team performed a walkthrough of each project to assess whether each of the identified steps in the regional governance process had been carried out.
Through questionnaires, individuals were surveyed from each region and the responses were analyzed and additional information gathered as required.
Regional governance processes: Overall results
This table identifies the required level of approval authority for investment projects, based on the project's complexity and total dollar value. Project complexity is rated from 1 to 4, with 1 representing low-complexity projects and 4 representing the highest complexity projects.
✓: Criteria met
Note: All governance criteria were met by each region.
|Governance processes (audit criteria)||Pacific Region||Western Region||Ontario Region||Engineering Region||National
|Quebec Region||Atlantic Region|
|1. Oversight bodies are established to ensure effective management over regional investments||✓||✓||✓||✓||✓||✓||✓|
|2. Oversight bodies are established to provide strategic direction and oversight over regional investments||✓||✓||✓||✓||✓||✓||✓|
|3. Roles, responsibilities, and accountabilities of the oversight committees related to the regional investments are sufficient, and have been defined, documented, and fulfilled||✓||✓||✓||✓||✓||✓||✓|
|4. Formal monitoring and reporting mechanism are in place to provide oversight committees with timely information that allows them to monitor the progress of regional investments, and compliance with policies and procedures||✓||✓||✓||✓||✓||✓||✓|
Regional control processes: Overall results
✓ : Criteria met
Note: All control process criteria were met by each region.
|Control processes (audit criteria)||Pacific Region||Western Region||Ontario Region||Engineering Region||National
|Quebec Region||Atlantic Region|
|1. A sufficient, appropriate and documented process is in place and followed for regional investments||✓||✓||✓||✓||✓||✓||✓|
|2. Regional processes for Integrated Investment Plan projects are consistently applied to Integrated Investment Plan investments within the regions||✓||✓||✓||✓||✓||✓||✓|
Oversight bodies were established and included appropriate representation to provide oversight over regional investments
We found that all the regions, including National Capital Area and Engineering Assets, had a regional investment management board or an equivalent committee. Each committee had defined and documented mandates, which provided details of the purpose of the committee, membership, frequency of meetings and roles and responsibilities of committee members.
Committee membership includes representation from a variety of subject matter experts at the management level, including Finance and Administration Branch and Client Services, and note that other subject matter experts may attend as guests as required. We were informed that the members collectively possess the knowledge and expertise to make informed decisions.
Oversight bodies provided strategic direction on regional investments
We found that oversight bodies met on a regular basis and provided strategic direction on regional investments (such as project discussions as well as review of project documentation and risks).
We found that the Investment Analysis Report, which is a key project document identifying project information such as costs, risks and similar project details, was provided to the regional investment management boards. The reports identified the alignment between the project and strategic plans such as the Asset Management Plan, the Building Management Plan, and Community-Based Investment Strategy.
The reviewed meeting minutes indicated that the members discussed how the investments aligned with various Real Property Branch and Public Services and Procurement Canada's strategies such as Workplace 2.0, the Accelerated Infrastructure Program 2 and the National Investment Strategy.
Oversight bodies requested and received sufficient, complete, timely and accurate information relating to projects
Information such as the Investment Analysis Report, which identified key project information including a project's technical and financial details, risks, and alignment with strategic plans was presented and reviewed at the Regional Investment Management Board. To ensure the information was accurate and complete, the information was distributed and reviewed by subject matter experts in advance of presentation at the management committee.
All regions, including National Capital Area and Engineering Assets, provided evidence of technical review in advance of the committee. There were some differences between regions in the form of this advance review, with some regions having a defined sub-committee with approved terms of reference, while others had informal working groups or reviews by a few specified subject matter experts.
We noted that while regions were required to have a regional investment management board for their delegations of authority, sub-committees were optional
Responses from the chairs of the a regional investment management boards indicated that the information provided was detailed, sufficient, complete, timely and accurate to facilitate making informed decisions regarding projects. In addition, we were informed that as required, subject matter experts would attend management committee meetings to provide additional support to the committee.
During our review of several management committee meeting minutes from each region, including National Capital Area and Engineering Assets, we noted various individuals being invited as guests to the meetings to provide additional support.
Roles and responsibilities of oversight committees were defined and documented; some are in the process of being updated to address recent changes in governance processes
The terms of reference for all the regional investment management boards (or their equivalent boards) documented in detail, the purpose, authority, membership, and roles and responsibilities. 6 of the 7 management committees documented the meeting frequency directly in their terms of reference, and all management committees met in accordance with their documented meeting frequency. Pacific Region noted that they were in the process of updating their terms of Reference to reflect recent changes in the meeting frequency.
- Regions can now both approve projects, as well as approve the project's inclusion in the plan when the approval is within their delegated authority
- In addition, there is a new requirement for the management committees to monitor projects after approval
Roles and responsibilities of committee members were fulfilled
We obtained evidence that the management committee members received relevant project information, and provided a challenge function over items related to the projects.
Meeting minutes and records of decision from the management committee meetings identified projects under the plan were being reviewed and project information was being discussed and challenged. The minutes also identified cases where the committee required additional information to be provided, and concerns addressed before a project was approved.
Management committee attendance for the Pacific, Western and Atlantic regions, as well as the National Capital Area and Engineering Assets, was very strong. We are unable to determine the attendance rates for the Ontario and Quebec regions' management committee meetings as the meeting minutes did not clearly indicate when an individual was absent or if a replacement was sent on a member's behalf. Both regions stated they are working towards improving their meeting minutes to better identify attendance. Subsequent to our examination phase, Ontario Region provided management committee minutes from a meeting which clearly indicated all voting members were present.
Monitoring and reporting took place for regional investment projects
The Investment Analysis Report, along with other key project information, is provided to the oversight committee in advance of project approval. Information in the report included a risk assessment and details on how the project management team would mitigate and manage/mitigate the risks.
We were informed by the regions that, during the time of the review's scope, the regional investment management boards played a key role in the project approval and Integrated Investment Plan inclusion process. However, once the projects were included in the plan further project monitoring and reporting was not specifically a part of the management committee's duties. Project monitoring was carried out at the regional level by a variety of other avenues, such as separate committees whose responsibilities included providing oversight over projects experiencing challenges.
We were advised that a new requirement was recently added to the role of the management committees that required them to monitor the performance of projects after approval by reviewing status updates using On Time, On Budget, On Scope reports. The management committee's terms of reference were recently updated to reflect this requirement in their roles and responsibilities.
Policies, directives, guidelines and/or procedures were in place, and the alignment of investment policies, directives, guidelines and/or procedures were periodically assessed
The Pacific Region, National Capital Area portfolio, Western Region and Ontario Region had detailed process maps outlining the regional approval process for Integrated Investment Plan project documentation. Other regions had guidelines but had not documented the process with the use of maps.
All Regions explained the plan's governance process consistently and accurately, including the steps that take place at the regional level, and provided evidence of a project going through each step of the process.
At the project management level, we found that the project managers and leaders had a strong understanding of the National Project Management System and the project approval process; however, the level of knowledge regarding the plan's approval process was inconsistent, as was training on this process.
We were advised that the regional owner-investor representative was responsible for the plan's process, while the project managers and leaders were responsible for project delivery and preparing National Project Management System documents which serve as the plan's inputs, as well as provided information for the On Time, On Budget, On Scope reports. This mitigated risk that the plan's process would not be followed at the project management level.
We were informed that the plan's processes at the regional level were being updated during the timeframe of our review to reflect the requirement for regional investment management boards to review project status reports for their regional projects under the plan.
Investments (projects) followed the plan's process, and controls were in place to ensure the processes were consistently applied to projects under the plan
To assess whether regional projects followed the process, and to identify the controls within the process, we surveyed members of the Regional Investment Management Board and the sub-committees. To confirm the controls that existed in the process, we interviewed key contacts in the regions, National Capital Area, Engineering Assets, and National Portfolio Management within Real Property Branch.
We conducted a walk-through of the process, and sampled one project from each region, National Capital Area and Engineering Assets. We found the following controls:
- the Regional Investment Management Board reviewed relevant documentation such as the preliminary project plan, investment analysis reports, asset management plans, community-based asset strategies, real property investment proposals and National Project Management System documents
- the representative from Finance and Administration Branch reviewed the financial analysis documentation
In addition to the regional level reviews and approval, an additional review was completed at headquarters to ensure that the appropriate approvals were in place, and the appropriate documentation had been completed.
The results of our review of projects indicated that all projects had followed the defined process as described. We noted that the Quebec and Ontario projects did not have a completed Chief Financial Officer attestation checklist; however, we were told that this was not a requirement during the period these projects were approved regionally.
New projects under the plan all require that this review be completed by a regional finance representative, and the form signed by the Regional Director of Finance and Administration Branch's Finance Services.
Continued evolution of governance processes
During the course of the review, the regional governance processes continued to evolve. These changes impact the process for Integrated Investment Plan projects after review by the Regional Investment Management Board, and include:
- after regional governance processes are complete, the project information is provided to the Office of Investment Management in Finance and Administration Branch to continue through the headquarters portion of the plan
- previously, the project information had been provided to National Portfolio Management within the Real Property Branch for review by the Real Property Branch-level Integrated Investment Plan governance committee for decision on project inclusion in the plan
- the project information was provided to Finance and Administration Branch for the review of the project documentation to continue through headquarters portion of the plan
- regions could approve projects within their approval authority; however, this approval was conditional on approval for inclusion in the plan, meaning work on these projects could not continue until they had gone through Real Property Branch approved inclusion in the plan
- regions can now approve projects for inclusion in the plan within their approval authority
- we were informed that the process was streamlined to reduce delays for regional projects, by eliminating the duplication of work
As these processes were modified and still being implemented during the time the review took place, we did not assess projects going through the modified process. At the end of our examination phase, few regions had a new project that went through the new process, and the changes identified did not impact the governance process which took place before projects are brought to the Regional Investment Management Board.
Each region, including the National Capital Area and Engineering Assets, had sufficient and appropriate governance and control processes for Integrated Investment Plan investments, which were consistently applied to ensure the effective management of investments.
Since the timeframe of our review, the regional investment management boards' roles and responsibilities have been updated to include monitoring of the performance of projects under the plan after they had been approved. This monitoring had previously been carried out through other channels regionally, and at the headquarters level.
Management has had the opportunity to review the final report for the Review of Regional Governance Processes for Investment Management and agrees with the conclusions that are presented.
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