Audit of the Office of Religious Freedom

Final Report

Global Affairs Canada
Office of the Chief Audit Executive

March 2016

Executive Summary

In accordance with the Department of Foreign Affairs, Trade and Development’s (now Global Affairs Canada, the Department) Risk-Based Audit Plan for 2014-2015, the Office of the Chief Audit Executive conducted an audit of the Office of Religious Freedom. The objective of the audit was to assess the effectiveness of governance, risk management and controls supporting the Office’s grants and contributions activities.

The intention to create an Office of Religious Freedom (the Office) was announced in the 2011 Speech from the Throne. The office, headed by an ambassador, was opened in 2013 with an annual budget of $5 million for four years. The Office’s mandate includes defending religious minorities, promoting religious freedom, and advancing policies and programs that support the right to freedom of religion. The Office achieves its objectives through different activities including the issuance of grants and contributions, with each project funded for a maximum amount of $500,000 in grants or $1.25 million in contributions. The first projects were initiated in 2013.

The audit examined the Office’s governance and risk management framework as well as processes and controls in place to approve, monitor and report on grants and contributions managed by the Office.

Conclusion

The audit found that the Office has a management control framework in place.  Key components such as the establishment of a Project Selection Committee, and supporting controls and templates for project approvals and disbursements, were found to be effective and adequate to meet the mandate of the Office.

Some opportunities exist for improvement in the areas of strategic planning, monitoring and performance reporting. These improvements will position the Office for a more effective delivery of its activities as well as to better demonstrate its results. The first challenges the Office faced concern the implementation of its governance committees, in setting strategic direction and in the communication of this direction with departmental stakeholders. Second, while compliant with departmental grants and contributions approval processes, roles and responsibilities are not well established with respect to monitoring and reporting project outcomes and results. Finally, the Office needs to implement a system to report on the outcomes of funded projects. Recommendations have been included in the report to address these areas for improvement.

Statement of Conformance

In my professional judgment as Chief Audit Executive, this audit was conducted in conformance with the Institute of Internal Auditors' International Standards for the Professional Practice of Internal Auditing and with the Internal Auditing Standards for the Government of Canada, as supported by the results of the quality assurance and improvement program. Sufficient and appropriate audit procedures were conducted, and evidence gathered, to support the accuracy of the findings and conclusion in this report. The findings and conclusion are based on a comparison of the conditions, as they existed at the time, against pre-established audit criteria and are only applicable to the entity examined and for the scope and time period covered by the audit.

Chief Audit Executive

1. Background

The audit of the Office of Religious Freedom was included in the Department of Foreign Affairs, Trade and Development’s (now Global Affairs Canada, the Department) Risk-Based Audit Plan for 2014-2015. The objective of the audit was to assess the effectiveness of governance, risk management and controls supporting the Office’s grants and contributions activities. The audit objective, scope and criteria are included in detail in Appendix A.

Establishment of the Office of Religious Freedom

In February 2013, the Office of Religious Freedom (the Office) was established in the Department, headed by an Ambassador.  Funding for the Office is allocated from the International Assistance Envelope, in the amount of $5 million per annum for a four-year period beginning in 2012-2013.  The annual budget is allocated to grants and contributions ($4.25 million) and to operating costs ($0.75 million).

The Office’s mandate is as follows:

• Defending religious minorities, monitoring religious freedom and calling attention to the religiously persecuted and condemning their persecutors;
• Promoting religious freedom as a key objective of Canadian foreign policy and encouraging greater attention to freedom of religion along the rights enunciated in the Universal Declaration of Human Rights as well as other human rights instruments; and,
• Advancing policies and programs that support the right to freedom of religion and promoting the pluralism that is essential to the development of free and democratic societies.

The Office achieves this mandate through different activities including policy, advocacy/outreach, and the issuance of grants and contributions under the Religious Freedom Fund (RFF).  The objectives of the RFF are as follows:

• To compel action internationally against violations to religious freedom by contributing to greater awareness of threats to religious freedom and by promoting pluralism;
• To strengthen the Government of Canada’s response to specific violations of religious freedom; and,
• To promote education on issues of tolerance and freedom of religion.

The Office carries out five activities: advocacy on behalf of religious freedom; analysis and communication of information; training of Canadian diplomats; consultations with stakeholders and programming that entails the management of grants and contributions.

The Office’s Grants and Contributions Program Overview

The business process related to the management of the Office’s grants and contributions involves the following basic steps:

• Applications are submitted using a template developed by the Office to ensure complete and relevant information about projects for which funds are being sought;
• Applications are reviewed for recommendation to the Minister by a Project Selection Committee (PSC), consisting of the Ambassador, the Director General responsible for human rights policy, and Directors with geographic responsibilities;
• Grants and contributions agreements are reviewed for compliance with the requirements of the Treasury Board Policy and Directive on Transfer Payments;
• Grants and contributions (including endowment funding) recipients are required to report on outcomes in relation to performance indicators specified in the agreements; and,
• An annual report is prepared by the Office for input to the Departmental Performance Report, summarizing the Office’s activities and results achieved over the previous year.

Grants and Contributions Project Approval

Initially, the Office used a business process modeled after the Department’s Stabilization and Reconstruction Task Force (START) process for grant and contributions.  To do this, the Office contacted missions to gather options for possible projects. These options were refined and some ideas were further developed to become approved projects. The first nine projects were selected between September 2013 and June 2014 using the START process and resulted in a total amount of $4.6 million in contribution agreements for the period.  In 2014-2015, the Office was included in a pilot program to use an adapted version of the Department’s Authorized Programming Process (APP).  The APP involves a lengthier and more robust application process and some components of the application process require recipients to provide financial reports, performance measurement framework and logic models.  As well, the Office has to review each project application against thematic priorities and selected criteria.  Furthermore there is a vetting process with relevant missions and Geographic groups prior to the Project Selection Committee. Under the APP, the RFF has selected and approved funding of $3.9 million for ten projects signed in 2014-2015 and 2015-2016.

2. Observations and Recommendations

As described in Appendix A, the audit team used different techniques and procedures to gather supporting evidence for the observations and related recommendations. The observations are organized in the themes of development and communication of strategic plans, roles and responsibilities, monitoring and reporting, and performance measurement.

2.1 Development and Communication of Strategic Plans

The audit team expected to find that the Office has developed and communicated a strategic plan with clear objectives and results expected for the program.  A plan provides a clear link between the mandate of the program and its operational requirements, such as program priorities, activities of interest, geographic allocation of funds, size and number of projects, stakeholders’ roles and responsibilities, project monitoring and reporting.  

In interviews with the audit team, management explained that the Office faced capacity issues at the outset of its establishment, leading to challenges in developing, communicating and implementing strategic objectives for this complex and sensitive program with such a broad mandate. In the absence of a formal strategic plan, the Office relies on other less formal means to communicate its mandate, objectives and funding arrangements. These include an external website for the Office and the RFF, media releases, speeches by the Ambassador in Canada and abroad as well as internal departmental presentations and targeted training as the Office proceeded with its implementation.

While this means of communication has helped to provide understanding of the Office’s mandate, objectives and operations, its distribution and impact is limited to people who are directly involved with the Office. 

Capacity issues at the onset of the Office also led to delays in establishing the Office’s operations, processes for the management of grants and contributions and communicating its mandate and objectives to the Department in the first two years of operations.

In conclusion, even though the Office has made efforts to establish communication of the program, its objectives and operations with select countries and personnel, the audit concludes that a strategic plan is critical to ensure that the program objectives are aligned with the Department’s overall priorities and to monitor progress.

Recommendation 1

The Assistant Deputy Minister, International Security and Political Affairs should ensure the program’s strategic plan, including clear objectives and expected results, is developed and communicated to partners,  missions, and other departmental stakeholders.

2.2 Roles and Responsibilities

In order to support the successful delivery of the program, the audit team expected to find that roles and responsibilities of Department staff have been defined and communicated to ensure effective program operations, governance, and oversight, monitoring and reporting requirements.

The audit team determined that the overall structure of the Office has been established.  At a senior level, the reporting relationship of the Ambassador with the Deputy Head and Assistant Deputy Ministers has been implemented.  A management level committee, the Interdepartmental Consultative Committee (ICC) is in place to facilitate the coordination of policy, priority-setting and programming between departments.  The ICC is chaired by the Ambassador and includes representatives at the Director General-level from the Department,   Immigration, Citizenship and Refugees Canada (ICR) and other departments as required.  The Director General responsible for human rights policy and a Director General with geographic responsibilities are also members of the ICC to ensure coherence with Department’s related programs and geographic operations. At the time of the audit, there was evidence demonstrating that ICC had played its role in identifying priority countries and in reviewing project approval criteria.

At the operational level, the Project Selection Committee (PSC) was established and is responsible for reviewing proposed projects by the Office to be funded from the Religious Freedom Fund (RFF). The PSC provides opportunities for the project review process to consider alignment with other departmental programming, and ensure all relevant risks are considered for funding allocation decision. Based on evidence collected, the audit team concluded that the PSC played its role in an effective manner.

The audit team found that there is good understanding of roles and responsibilities among officers and managers directly involved in daily operations of the program. However, the roles of missions are less clear. The program was initially designed with the intention that missions would be actively involved in project monitoring and reporting, a key role to ensure the successful delivery of the program. The audit team determined that missions’ involvement is mostly limited to project approval processes, advocacy support and other project related requests from the Office.  Missions’ roles and responsibilities with regard to project monitoring and reporting have not been formally documented and communicated, which has led the Office to rely on informal processes, which precluded it from gathering information on individual project’s performance.

In summary, governance and oversight functions have been defined and implemented.  However, improvements are required in better defining roles and responsibilities for the Office and missions with respect to project-specific monitoring and reporting (see recommendation 2 under section 2.3 below).

2.3 Project Approval, Disbursement, Monitoring and Reporting

To ensure a grant and contribution program is managed and delivered consistently, efficiently and in compliance with relevant policies and procedures, it is expected that:  tools and approval documentation are developed and approved in accordance with departmental policies; all projects comply with program eligibility and assessment criteria; and, mechanisms are in place to monitor whether funded projects are delivered as set out in the agreement.  At the time of the audit, the Office reviewed and approved nineteen (19) project files since its inception.

The audit team has concluded that:

• The Office has deployed project development tools and approval documentation, leveraging processes and resources available to ensure successful selection of projects as per departmental policies and guidelines and as per the Terms and Conditions of the Religious Freedom Fund;
• The project disbursement conditions and approval authorities are clear, understood and followed; and,
• Mechanisms to monitor and report on whether funded projects are managed and delivered as per signed agreement need to be put in place.

At the beginning of the program, the Office developed project approval templates and tools in line with the Department’s Stabilization and Reconstruction Task Force (START) process, which was used to select nine projects.  In 2014, the Office was chosen to participate in a pilot program using the Approval Programming Process (APP) in assessing projects; ten projects were selected under this process.  The adoption of the APP has provided the Office with a stronger approval process due to the additional expertise available and a more rigorous and standardized approach.

The audit team noted benefits in the use of APP.  The process allows alignment of project selection to the requirements of the terms and conditions of the RFF as the selection of the project is now based on the entire package (application form and supporting documents such as the logic model, performance measurement framework, budget and cash flow forecast).  The APP also enables the Office to not only use standardized templates but it also required additional considerations (such as gender specialists, environment and governance specialist, and financial management analyst) in the project evaluation process. The use of the Fiduciary Risk Evaluation Tool (FRET) within the APP has also enabled the project officer to have a better understanding of all the risks pertaining to the project and potential partner.  Further, through the file review, the audit team noted that proper due diligence is done prior to the missions and Project Selection Committee review.

Audit examination concludes that in general, the APP and FRET systems are beneficial in supporting rigorous assessment of applications.  It was noted that in two out of ten files reviewed by the audit team, FRET was not used in the APP process, leading to missed opportunity to ensure risk to the organisation was well managed. Also, the risk assessments were not always fully supported in all the files. 

In terms of funds disbursement, the auditor’s review of project files confirmed that financial authorities are respected and that segregation of duties is applied between the program officers and the Ambassador to ensure payments comply with Department’s policies.

With regard to project monitoring and reporting, the audit team noted that minimal active monitoring of individual project progress is conducted due to the fact that program officers are mostly dedicated to initiating and assessing projects to ensure funds are appropriately allocated to projects.  In addition, missions have not been as involved in the monitoring phases of the projects as it was initially expected. 

Recommendation 2

The Assistant Deputy Minister, International Security and Political Affairs, should ensure that risk assessment is performed for all projects and that mechanisms are in place, including defined roles and responsibilities between missions and the Office, for effective monitoring and reporting on projects funded by the program.

2.4 Performance Measurement

The Office is required to report, on an annual basis, on the results of its activities.  To do so, the Office has developed a performance measurement strategy that identifies measures used to evaluate each project and to report on the overall performance of each project and the program overall.

Given the delays in implementing projects at the commencement of the program and limited capacity to monitor and report at a mission and project level, the Office has not been in a position to consistently provide performance reports as required.  Only one report was produced in 2013, which did provide an overall perspective with an emphasis on key accomplishments and setting the stage internationally for the Office and the RFF.

There is a risk to the Department that the overall results of the program may not be available for decision making purposes and to ensure the Office meets it mandate and that of the Department.

Recommendation 3

The Assistant Deputy Minister, International Security and Political Affairs, should ensure program results are collected and rolled-up annually in order to better position the Office in demonstrating the achievement of its objectives and its contribution to departmental priorities.

3. Conclusion

Overall, a management control framework has been established for the Office.  Key components such as controls for project approvals and disbursements were found to be effective and adequate.  In addition, the audit noted that the Office is generally in compliance with relevant Acts, its terms and conditions and policies and procedures.

However, the audit has identified the following areas for improvements in order to increase the effectiveness of the Office:

• Establish a strategic plan to ensure all stakeholders are apprised of the activities of the Office ;
• Clarify and communicate roles and responsibilities   with missions for ongoing monitoring and reporting of projects implementation with partners; and,
• Ensure effective monitoring and reporting as well as overall program performance reporting.

Appendix A: About the Audit

Audit Objective

The objective of this audit was to assess the effectiveness of governance, risk management and controls supporting the Office’s grants and contributions activities.

Audit Scope

This audit included:

• Grants and contribution processes used;
• Approved projects and payments made to recipients since the implementation of the Office in 2012, including samples of payments made under the older and the newer grants and contributions process;
• Internal project planning; and
• Financial information for 2012-2013 to 2015-2016.

Audit Criteria

The following criteria were developed for this audit based on the risks identified in the planning phase and a review of the Core Management Controls developed by the Office of the Comptroller General of Canada:

1. There is a governance framework and practices in place.
2. The Office’s control framework includes formal risk management practices to assist in decision-making.
3. There are effective departmental controls in place to ensure the Office and Religious Freedom Fund are managed and delivered consistently and efficiently and are in compliance with relevant policies and procedures. 

Approach and Methodology

The auditors completed the audit using the following audit methodologies:

• Conducting interviews with employees of the Office of Religious Freedom, including the Ambassador and the Deputy Director;
• Conducting interviews with other corporate units, including employees of the Grants and Contributions Centre for Expertise, Evaluation Division, and Heads of Missions and Project Officers from Missions;
• Conducting walkthroughs of the processes, identifying key internal controls and mapping processes;
• Reviewing a sample of project files;
• Identifying and reviewing relevant policies, guidelines, and legislation; and
• Analyzing financial and non-financial information.

Appendix B: Management Action Plan