November 2009
Recommended for Approval to the Deputy Minister by Departmental Audit Committee on July 8, 2009
Approved by the Deputy Minister on July 22, 2009
Table of Contents
1.0 Executive Summary
1.1 Introduction
The follow-up to the audit of Management of Communications Research Centre (CRC) Building Systems was carried out in accordance with the Audit and Evaluation Branch's (AEB) 2008/09 risk-based audit plan which was recommended by the Departmental Audit Committee (DAC) and approved by the Deputy Minister.
The objective of this follow-up was to ensure that management had effectively implemented the actions arising from the recommendations contained in the Audit of the Management of CRC Building Systems Audit Report, April 2006.
The objective of the audit completed in April 2006 was to determine whether existing management and operational processes related to real property at the CRC effectively support organizational objectives, as well as the health and safety of employees, in compliance with existing authorities.
In conducting the 2006 audit the adequacy of the real property Management Accountability Framework (MAF) established for CRC was assessed, versus assessing risks to the agency's real property assets (e.g., by conducting inspections of buildings at the Shirley's Bay facilities).
The 2006 audit noted the absence of an overarching management framework for real property which contributed to observed deficiencies. Once in place such a framework would ensure that resources and data that are needed to manage real property in a more efficient, effective manner are readily available for management decision-making purposes. CRC management indicated that the situation at the time was the direct result of prolonged funding pressures. The 2006 Audit Report contained 8 recommendations (please refer to Appendix A for additional details) which addressed issues related to Cost Allocation Exercise, Planning and Budgeting Process, Management Function, Capital Planning Process, Accountability, TBS Policy on Management of Real Property, Science Programs and Tenant Costing.
The CRC Review, undertaken in fiscal year 08-09 at the request of Senior Management, addressed four elements related to the CRC Mandate: Client based research and development, Core research and development, Governance, and Campus Operations (who are responsible for Real Estate and Property of the campus). A Management Action Plan was created to address recommendations contained in the CRC Review and the results were presented to the CRC Review Steering Committee in May 2009.
1.2 Actions in Progress
The results of the follow-up indicate that 6 of the 8 (see Appendix A) recommendations have been addressed with 2 recommendations that are still in-progress as follows:
- CRC has commissioned several Building Condition Reports and has hired a Manager of Real Estate and Property. The Manager will be responsible for establishing a program to conduct regular reviews, evaluations and reports on real property for all of the buildings on the campus; and
- CRC is in the process of developing a multi-year capital reference level to support the CRC real property capital plan for inclusion in the IC Long Term Capital Plan (LTCP).
1.3 Conclusion
Follow-up work is performed as a review engagement and confirms the status of management action plan items. Further follow-up actions will be determined at a later time, given the recent CRC Review.
Bill Merklinger
Chief Audit Executive, Industry Canada
Date
2.0 About the Follow-up
2.1 Background
The CRC is located in Ottawa's west end, at the Shirley's Bay Research Centre Campus — a set of facilities and test ranges that covers 600 hectares of land connected by 13 kilometres of road. The CRC shares this site with National Defence (DND), and the Canadian Space Agency (CSA). The campus houses 157 permanent and temporary buildings that were built 4 to 55 years ago. Buildings serve as laboratories, computer centres, offices and libraries. As well, large open areas serve as antenna ranges used for research and testing purposes.
The Audit and Evaluation Branch conducted a follow-up of the Management of Communications Research Centre (CRC) Building Systems Audit which was tabled and approved at the Departmental Audit and Evaluation Committee in April 2006.
The initial audit noted the absence of an overarching management framework for real property at the CRC which contributed to observed deficiencies. CRC management indicated that the situation at the time was the direct result of prolonged funding pressures. The 2006 Audit Report contained 8 recommendations which addressed issues related to Cost Allocation Exercise, Planning and Budgeting Process, Management Function, Capital Planning Process, Accountability, Compliance with TBS on Management of Real Property, Science Programs and Tenant Costing.
The CRC Review, undertaken in fiscal year 08-09 at the request of Senior Management, addressed four elements related to the CRC Mandate: Client based research and development, Core research and development, Governance, and Campus Operations (who are responsible for Real Estate and Property of the campus). A Management Action Plan was created to address recommendations contained in the CRC Review and the results were presented to the CRC Review Steering Committee in May 2009.
The results of the follow-up indicate that 6 of the recommendations have been addressed (see Appendix A) with 2 recommendations that are still in-progress. In some cases CRC has not addressed the items on the action plan exactly as outlined but decided to take a different route to come to the same requested result.
2.2 Objective of the Follow-up
The objective of the follow-up to the 2006 audit report was to ensure that management has effectively implemented the actions arising from the recommendations contained in the April 2006 report.
2.3 Scope of the Follow-up
The follow-up focused on management action plan commitments as outlined in the Audit of the Management of Building Systems CRC Audit Report, April 2006.
2.4 Approach and Methodology
This follow-up of the Management of CRC Building Systems was conducted in accordance with the Federal Government Policy on Internal Audit. The approach to the follow-up consisted of reviewing documents (TBS Policies, CRC Processes), interviewing key managers in CRC, as identified in the Action Plan, testing of the IC Long Term Capital Plan for inclusion of CRC capital items, and testing tenant invoices for charges of stewardship costs.
3.0 Actions in Progress
The following summarizes the action items that have not been fully completed as per the management actions developed by CRC to address the recommendations contained in the 2006 Audit Report.
3.1 TBS Policy on Management of Real Property (Recommendation 7)
It is recommended that the Director, Campus Operations Branch establish a program for conducting regular review, evaluation and reporting on real property as per the requirements of TB policies for Real Property.
Management Response
CRC agrees in principle with this recommendation, however, implementation would depend upon incremental funding. Treasury Board Real Property Policies are based on the life cycle management concept. Life cycle management requires knowledge of current building conditions, and planned maintenance and repair. CRC would have to develop systems and assign personnel to create and update the required information. Compliance with this recommendation would require salary resources, as well as incremental, ongoing annual expenditures for consulting services to provide Building Condition Reports, as well as the software and hardware required for a system to report on annual maintenance and operating costs. A program for regularly reviewing, evaluating and reporting on its real property as per the requirements of the TB Real Property policies will be carried out consistent with budgetary allocations.
Assessment — in-progress
CRC has commissioned several Building Condition Reports and has hired a Manager of Real Estate and Property. The Manager will be responsible for establishing a program to conduct regular reviews, evaluations and reports on real property for all of the buildings on the campus.
As indicated in the 2006 audit report, establishing this program will result in CRC management having the proper and current information in place to make informed decisions on real property issues.
3.2 Capital Planning Process (Recommendation 4)
It is recommended that, as necessary, the CRC review its real property capital planning requirements for inclusion in IC's Long Term Capital Plan as a means to mitigate risks to the department's real property assets at Shirleys Bay. In particular, the review should reassess:
- The reasonableness of assumptions underlying the classification of real property capital projects as "funded";
- The implications of the real property capital program for operational funding requirements at CRC;
- Whether there is a need for developing more explicit, proactive risk management strategies and plans with respect to real property assets at Shirleys Bay.
Management Response
CRC agrees with the recommendation and will develop an appropriate response consistent with IC priorities and TB policy. CRC review its real property capital planning requirements for inclusion in IC's Long Term Capital Plan (LTCP). Assumptions underlying the classification of real property capital projects as funded. The implications of the real property capital program for the CRC's operational funding requirements. Whether there is a need for more explicit, proactive risk management strategies and plans with respect to the real property assets at Shirleys Bay.
Assessment — in-progress
CRC submits their annual capital plan requirements to CAS as part of the Long Term Capital Plan (LTCP); however, they fund LTCP projects from their own budget, as money is not available centrally. To obtain funding for capital projects, the Director Campus Operations (DCO) determines if funds are available within the CRC budget. If all requested funds are not available within the CRC budget, the DCO then approaches Spectrum, Information Technologies and Telecommunications (SITT), and then CAS if capital funds are still required. Once the CRC Budget has been finalized via the process described, the DCO approaches the campus tenants to request their share of capital expenditures. As a result, the selection of capital projects is based on available allocated funding.
CRC is in the process of developing a multi-year capital reference level for both campus operations and scientific equipment needs, taking into account any funds that may become available from the federal infrastructure fund.
As indicated in the 2006 audit report, limited financial resources put a strain on proper maintenance, resulting in requirements for careful allocation of resources among projects, capital and administrative expenditures.
Appendix A
| Management of CRC Building Systems Audit Recommendations | Follow-up Assessment | |
|---|---|---|
| Completed | In-Progress | |
Recommendation 1 (Cost Allocation Exercise)
| X | |
Recommendation 2 (Planning and Budgeting Process)
| X | |
Recommendation 3 (Management Function)
| X | |
Recommendation 4 (Capital Planning Process)
| X | |
Recommendation 5&6 (Accountability)
| X | |
| Audit Assessment | Completed | In-Progress |
|---|---|---|
Recommendation 7 (TB Policy on Management Real Property)
| X | |
Recommendation 8 (Science Programs and Tenants Costing)
| X |