Audit of the Harmonization of Grant and Contribution Program Administration at Global Affairs Canada

Final Report

Global Affairs Canada
Office of the Chief Audit Executive

October 2017

Executive summary

In accordance with Global Affairs Canada’s 2016-2019 Risk-Based Audit Plan, the Office of the Chief Audit Executive conducted the Audit of the Harmonization of Grant and Contribution (G&C) Program Administration at Global Affairs Canada. Grant and contribution payments represent a significant portion of the Department’s annual spending and are key instruments in furthering the Government’s policy objectives and priorities. The objective of the audit was to provide assurance on the adequacy and effectiveness of Global Affairs Canada’s processes for identifying and pursuing opportunities, where appropriate, to streamline, standardize and harmonize G&C program administration.

Why was this audit important?

Global Affairs Canada was established in 2013 as a result of the amalgamation of the Department of Foreign Affairs and International Trade (DFAIT) and the Canadian International Development Agency (CIDA). These departments delivered G&C programming across three streams: development, foreign affairs and trade; as such various program delivery frameworks and approaches existed at the time of amalgamation. The audit is expected to provide senior management with key insights for enhancing G&C program effectiveness and results through the streamlining, standardization and harmonization of G&C programming.

What was examined?

The audit examined roles and responsibilities for streamlining, standardizing and harmonizing G&C program administration, as well as the support provided by departmental oversight committees and decision-making processes for identifying and pursuing such opportunities. The audit also examined a selection of departmental initiatives undertaken since amalgamation to determine whether the initiatives were supported by appropriate direction, delegation, planning, reporting and oversight.

What was found?

Following amalgamation there was broad general agreement from senior management for streamlining and harmonizing G&C administration to achieve efficiencies and better outcomes. However, with the many pressing amalgamation priorities that had to be addressed at that time, there was limited interest in undertaking large scale G&C changes that could disrupt ongoing operations or compromise program delivery. A conservative approach was therefore adopted resulting in incremental, rather than strategic and methodical, progress towards streamlining and harmonization. Going forward, the Department requires a vision and an appropriate transformation plan to support the streamlining, standardization and harmonization of G&C administration and meet the requirements of the Policy on Transfer Payments.

The bureaus and divisions that led streamlining and harmonization initiatives lacked clarity with regard to their authorities and responsibilities and were not ideally positioned within the Department’s organizational structure to direct horizontal G&C change efforts. Further, the varied G&C related roles of the Corporate Planning, Finance and IT Branch (SCM) within the Department’s G&C control framework limits the Branch’s effectiveness in leading and supporting horizontal change initiatives. Finally, it has taken time for oversight committees to develop a shared understanding of their roles and responsibilities within the amalgamated Department and to establish adequate representation to effectively support streamlining and harmonization efforts.

Although no centralized and structured approach was developed to support the pursuit of identified initiatives to streamline, standardize and/or harmonize G&C programming, the majority of initiatives reviewed had well-defined objectives. Further, initiative leads generally used a consultative approach in pursuing opportunities, obtaining and integrating input from departmental stakeholders as appropriate. Future opportunities to streamline and harmonize G&C administration would benefit from strengthened project management regimes, as well as formal reporting and oversight mechanisms.

The creation of the International Assistance Operations Bureau (DPD) in April of this year, which reports to all DMs through DME, represents a potentially significant step forward in advancing departmental efforts to harmonize G&C delivery and administration.  DPD was created following the recent International Assistance Review, bringing together key G&C support functions and teams from across the Department to provide centralized operational guidance and coordination for Branches responsible for G&C programming.

What was concluded?

Departmental processes for identifying and pursuing opportunities, where appropriate, to streamline, standardize and harmonize G&C program administration were inadequate and were not effective to meet Policy on Transfer Payments (PTP) requirements. Given the substantial and diverse G&C programming across the Department, achieving sustained progress toward streamlined, standardized and harmonized G&C program delivery and administration will require the following:

• Documenting and communicating a clear vision and transformation plan for the harmonization of G&C administration practices;
• Appoint a central platform for guidance and coordination for G&C reform that includes all programming streams;
• Ensuring the authorities and responsibilities assigned to the central platform are appropriate and sufficient to direct and oversee horizontal change initiatives designed to harmonize G&C program administration; and
• Ensuring guidelines and a structured approach to support the management and implementation of specific initiatives, including an escalation mechanism for addressing appropriate concerns are established.  

Statement of conformance

In my professional judgment as Chief Audit Executive, this audit was conducted in conformance with the Treasury Board Policy and Directive on Internal Audit, 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, and to provide an audit level of assurance. The findings and conclusion are based on a comparison of the conditions, as they existed at the time, against pre-established audit criteria that were agreed upon with management and are only applicable to the entity examined and for the scope and time period covered by the audit.

Brahim Achtoutal
Chief Audit Executive                    

1. Introduction

1.1 Background

Global Affairs Canada was established in 2013 as a result of the amalgamation of the Department of Foreign Affairs and International Trade (DFAIT) and the Canadian International Development Agency (CIDA). Each of these departments delivered grant and contribution (G&C) programming and therefore various program delivery frameworks and approaches existed across the newly created Department at the time of amalgamation.

G&C payments represent a significant portion of Global Affairs Canada’s annual spending and are key instruments in furthering the Department’s policy objectives and priorities. In 2015-16,^{Footnote 1} the Department spent $4.2 billion dollars in transfer payments. Programming is delivered through a combination of grants, assessed contributions and non-assessed contributions across three streams: development; foreign affairs; and trade.^{Footnote 2} Spending by stream in 2015-16 is summarized in the table below.

The Government of Canada's G&C programs are governed by the Treasury Board Policy on Transfer Payments (PTP) and the supporting Directive on Transfer Payments. The PTP provides advice to departments that manage G&Cs, setting out clear roles and responsibilities for Ministers and Deputy Heads in the design, delivery and management of transfer payment programs. Among other things, the PTP stipulates that Deputy Ministers are responsible for ensuring:

• cost-effective oversight, internal control, performance measurement and reporting systems are in place to support the management of transfer payments;
• the harmonization of transfer payment programs within the Department, and ensuring collaboration with other departments;^{Footnote 4} and
• opportunities are pursued to standardize the administration of transfer payment processes, procedures and requirements within the Department and, to the extent possible, with other departments, to achieve efficiencies in the administration of transfer payment programs for applicants, recipients and the Department.^{Footnote 5}

Pre-amalgamation: Grant and contribution administration

Significant differences existed in the delivery frameworks and approaches that supported G&C programming between CIDA and DFAIT. At the time of amalgamation, CIDA had one set of Terms and Conditions (T&Cs) that encompassed the full development assistance budget managed by the Department. In the years preceding amalgamation, CIDA had standardized considerable G&C processes across its various branches by developing the Agency Programming Process (now referred to as the Authorized Programming Process or APP). The APP represented a common G&C delivery approach, with automated tools, to be used by all development programming classes (specifically bilateral, multilateral and partnership programming). Within CIDA, the Chief Financial Officer (CFO) Branch was the department’s functional authority for Gs&Cs programming, and the APP business owner, providing integrated program support, guidance and oversight.^{Footnote 6} As demonstrated in Table 1 above, 93% of Departmental grants and contributions are administered in accordance with the authorized programming process.

By contrast, DFAIT had 10 sets of T&Cs supporting G&C programming in the foreign affairs stream and 4 sets of T&Cs in the trade stream.^{Footnote 7} Within the former DFAIT, program divisions led all aspects of G&C management, with each foreign affairs program managed independently, and trade programs using common administrative processes for establishing agreements and processing payments. CFO Branch at DFAIT played a limited oversight role, housing a small Centre of Expertise for G&Cs that reviewed funding agreements and provided guidance and support as requested.

Post-amalgamation: Grant and contribution harmonization

The amalgamation of DFAIT and CIDA provided the Government of Canada with an opportunity to adopt a new and more coherent approach to international engagement, strengthening alignment between foreign policy, trade and development objectives. Amalgamation of the two departments was a complex project with impacts on employees, governance, business operations and the tools and systems supporting operations and administration.

A Change Management Plan (CMP) was developed shortly after amalgamation that summarized key areas of focus for the new Department under six distinct headings: workforce; corporate governance; policy and programs; finance, administration and security; communications; and amalgamation management. Under finance, administration and security, the CMP identified the opportunity to harmonize G&C processes and program T&Cs. Making progress on harmonization has been challenging for Global Affairs Canada given that:

• three distinct programming streams continue to exist (development, foreign affairs and trade), each with its own objectives and priorities;
• there is significant variation in programming budgets across the three streams (as identified in Table 1);
• program delivery is distributed across multiple Branches (ten total), reporting up to three  Ministers (and three Deputy Ministers and an Associate Deputy Minister); and
• legacy program delivery models continue to exist that include, among other things, differing roles of CFO Branch (now the Corporate Planning, Finance and IT (SCM) Branch).

In addition, a Review of Programming Mechanisms (RPM) was undertaken to review the G&C programming mechanisms available to the Department and to identify issues with regard to coherence, efficiency, or effectiveness, and to propose potential solutions. Issues highlighted through the RPM included the need for: an enhanced approach to inter-program coordination; clarity around the thematic scope of programs; solutions to capacity bottlenecks (for example, related to contracting officers, financial management advisors and specialists); a single suite of programming (“selection”) mechanisms; and common tools and guidelines.

Post-amalgamation: Grant and contribution oversight

Currently, the oversight committees meant to support G&C programming within the Department include Programs Committee (PC) and Directors General Program Committee (DGPC). PC is one of four committees within Global Affairs Canada that supports and makes recommendations to the Department’s Executive Board (ExBo). DGPC is meant as a feeder committee for PC. The current mandates of both committees emphasize the importance of coherent and effective G&C programming. PC’s mandate includes providing leadership, guidance and advice on programming issues for the Department, including advancing programming coherence and excellence across the Department. DGPC’s mandate states it is a whole-of-department forum for information sharing meant to facilitate coherent and effective programming practices, as well as to discuss issues related to programming coherence and effectiveness across the department.

Recent organizational changes supporting grant and contribution harmonization       

The creation of the International Assistance Operations Bureau (DPD) in April of this year followed the recent International Assistance Review. DPD brings together key functions and teams from SCM and Strategic Policy Branch (PFM), as well as from the Geographic Coordination unit in the Americas Branch. As per the departmental announcement, the purpose of the Bureau is to provide centralized operational guidance and coordination for all Branches responsible for international assistance programs and it reports to the Deputy Minister, International Development, on behalf of all Global Affairs Canada’s deputy ministers.

1.2 Audit objective and scope

The objective of the audit was to provide assurance on the adequacy and effectiveness of departmental processes for identifying and pursuing opportunities, where appropriate, to streamline, standardize and harmonize G&C program administration and delivery.

The audit examined roles and responsibilities for streamlining, standardizing and harmonizing G&C program administration, as well as the support provided by departmental oversight committees and decision-making processes for identifying and pursuing such opportunities. The audit examined departmental initiatives undertaken since amalgamation to streamline, standardize and harmonize G&C programming, focussing on activities between April 1, 2015 and March 31, 2017.  The audit criteria are outlined in Appendix A.

The audit provides senior management with key insights for enhancing G&C program effectiveness and results through the streamlining, standardization and harmonization of G&C programming.  Due to the fact that they are mandated by statutory requirements or legislation, assessed contributions were excluded from the scope.

In addition, over the course of the audit, new opportunities to streamline, standardize and harmonize G&C administration were identified.  These opportunities were documented and analyzed by the audit team and are outlined in Section 3 of the report and detailed in Appendix C.  The identification and analysis of these opportunities was supplemental to the audit and therefore not included as part of the audit observations in Section 2.  This work was advisory in nature and does not provide audit level assurance.

2. Audit observations

2.1 Establishing a vision and plan for grant and contribution harmonization

The audit team expected to find that opportunities to streamline, standardize and harmonize G&C program administration were being identified and pursued in a systematic manner post-amalgamation.

The audit team found that following amalgamation there was general agreement from senior management for streamlining and harmonizing G&C administration to achieve efficiencies and improved program outcomes. However, with many pressing amalgamation priorities, there was limited appetite and ability on the part of management to undertake large scale changes to G&C programming that could disrupt ongoing operations or compromise program delivery. A conservative approach to streamlining and harmonization was therefore adopted. The drawback of this approach was that progress on streamlining and harmonization was incremental rather than strategic. Programming branches did not view streamlining and harmonization as a priority and therefore did not actively search out opportunities. In addition, some programming branches were reluctant to support initiatives led by other branches and were unsure of the benefits to be gained from proposed changes to G&C administration. As a result, the opportunities that progressed tended to be either those where authorities and responsibilities within the Department were centralized (for example, establishing Department-wide recipient auditing processes) or were stream specific rather than Department-wide (for example, enhancements to programming processes within the development stream).

The audit team found that the Department requires a more comprehensive and strategic approach to reforming G&C administration across all streams, including a clear vision and guiding principles, to meet expectations of the PTP. A clear vision is required to ensure internal stakeholders understand the direction senior management wishes to move in, while guiding principles are required to support the evaluation and prioritization of new opportunities and to further define management’s priorities and expectations for reform (for example, more efficient program delivery; enhanced recipient relationships; better overall management of risk). Finally, a transformation plan is required to support achievement of the vision and to consider (at a minimum):

• the sequencing of initiatives to optimize implementation success; 
• key integration points for policies, processes, practices and systems across programs and streams;
• dependencies in relations to non-G&C programming bureaus and divisions; and
• resource needs to support implementation of the plan and key initiatives.

The audit team found the newly formed DPD well positioned to be the departmental platform to reform G&C administration across all programs. However, DPD’s mandate and its specific roles and responsibilities have yet to be formally vetted and the name of the Bureau and initial mandate (including expected core functions) suggest its scope is limited to international assistance programming, rather than G&C programming across all streams. While significant differences exist in the nature and complexity of departmental programs that support international assistance programming versus programs not eligible under the international assistance envelope, opportunities to harmonize and streamline processes, procedures and practices across all programs exist and are unlikely to be identified and addressed if the scope of DPD’s mandate is limited to programs linked to the international assistance envelope.

Recommendation:

1. The Department should document and communicate a vision for reforming G&C administration and delivery and develop a transformation plan that will support its implementation as well as identify a central platform for G&C harmonization across all programming streams (development, foreign affairs, trade) for both international and non-international assistance programming, recognising the newly created DPD may be well positioned to provide this platform.

2.2 Aligning authorities, accountabilities and responsibilities

The audit team expected to find that responsibilities for identifying and pursuing opportunities to streamline, standardize and harmonize G&C program administration were well understood and appropriately aligned within the Department’s organizational structure. Further, with G&C programs delivered across ten different Branches under three distinct streams (and additional Branches providing varying degrees of functional support), the audit team expected to find that accountabilities, responsibilities and resources in support of G&C program design, delivery, monitoring, reporting and oversight would be in place and well aligned.

The audit team found there was a lack of clarity in the authorities and responsibilities of the bureaus and divisions that have led streamlining and harmonization initiatives since amalgamation. Further, these bureaus and divisions were not ideally positioned within the Department’s organizational structure to direct horizontal G&C change efforts. The majority of the departmental initiatives pursued to streamline and harmonize G&C programming in recent years were led by either the Grants or Contributions Management Bureau (SGD), within SCM, or the Program Coherence and Effectiveness Division (PCC), within the Strategic Policy Branch (PFM). Staff within programming branches recognized SGD and PCC as the leads on key initiatives. However, neither SGD nor PCC had clearly defined functional authorities for reforming G&C administration, making it difficult for them to address hesitance and resistance on the part of programming branches. Further, with both SGD^{Footnote 8} and PCC having existed within CIDA, there was concern among DFAIT program staff that efforts to streamline and harmonize would mean adopting processes and practices of CIDA, perceived as cumbersome and time consuming, rather than nimble and responsive. With numerous competing priorities, no new resources and a lack of clear authority, the progress that SGD and PCC were able to make on initiatives was limited and often focused on the development stream. Going forward, DPD could direct key initiatives itself, and/or monitor initiatives being pursued by others.

The audit team found that the different roles of SCM within the Department’s G&C control framework limit the Branch’s ability to support horizontal change initiatives to strengthen G&C program delivery and administration. As per the Treasury Board Policy on Financial Management, the CFO has key responsibilities with respect to internal controls over financial management and in supporting Deputy Heads in the governance and oversight of financial management.^{Footnote 9} The financial management responsibilities of SCM, relative to G&C controls, differ by programming stream. Within the development stream, SCM has explicit monitoring and approval roles in the project evaluation and approval process, and is responsible for coordinating the development of funding agreements. Within the foreign affairs and trade streams, SCM plays a consultative role, with program divisions leading most aspects of G&C administration and agreement development. These varied responsibilities limit SCM’s ability to obtain assurance on the effectiveness and efficiency of G&C financial management processes across programming streams, and in turn, to support horizontal G&C change initiatives designed to reform program delivery and administration.

The audit team found that PC and DGPC provide a valuable forum for information sharing and obtaining feedback on G&C reform initiatives. However, it took time for departmental committees to develop a shared understanding of their roles and responsibilities within the amalgamated Department and to establish adequate representation to support streamlining and harmonization efforts. Records of decision from PC and DGPC post-amalgamation indicated there was a lack of clarity in the roles and responsibilities of committees and the scope of their mandates. In terms of DGPC, the feeder committee for PC, the audit team was advised that the committee’s primary focus post-amalgamation was on development-related matters. This changed in mid-2016 when membership was updated to bolster representation across all programming streams. Without a shared understanding of roles and responsibilities or adequate program Branch representation, oversight committees were not always able to provide effective guidance, advice and direction to the bureaus and divisions leading streamlining and harmonization initiatives.

In a department with diverse G&C programming, spanning multiple branches, well understood and aligned authorities, responsibilities and resources are required to support program design, delivery, monitoring, reporting and oversight. Further, accountabilities in support of horizontal change initiatives designed to improve G&C program delivery and administration must be clear and well communicated.

Recommendation:

2. The Department should ensure the authorities and responsibilities assigned to the central platform for G&C administration are appropriate and sufficient to direct and oversee all horizontal change initiatives designed to reform G&C program administration, and that these authorities and responsibilities are clearly communicated to programming branches and to bureaus and divisions providing G&C functional support.

2.3 Initiatives pursued to streamline and harmonize

The audit team expected to find that the initiatives pursued by the Department to streamline, standardize and/or harmonize G&C program delivery and administration were supported by appropriate direction, delegation, planning, reporting and oversight. Through interviews and document review, the audit team identified 17 initiatives pursued since amalgamation that aimed, in varying degrees, to improve G&C programming through increased streamlining, standardization and/or harmonization. The audit team selected six of these initiatives for detailed examination based on their significance (specifically, potential impact on G&C administration), their expected application (specifically, multiple programming streams), and the scope of coverage relative to the audit objective (specifically, including elements of streamlining, standardization and harmonization). The 17 initiatives, including the six examined in detail, are listed in Appendix B. The audit team acknowledges that other initiatives may have been pursued that were not identified.

The audit team found that no centralized and structured approach was developed to support the pursuit of identified initiatives to streamline, standardize and/or harmonize G&C programming. Such an approach could have included processes and procedures for obtaining approval and direction on new initiatives, expectations surrounding management and implementation of initiatives, and reporting and oversight requirement. This was due in part to the fact that no Office of Primary Interest (OPI) had been identified to oversee integration and implementation of the identified initiatives. A strong central platform would ensure all initiatives are captured, appropriate consideration is given and records of decision are kept.  However, despite the lack of a centralized and structured approach to pursuing initiatives, the audit team found:

• The majority of initiatives reviewed had well-defined objectives, based on identified departmental opportunities.
• There was an obvious and appropriate lead assigned to each initiative.
• Initiative leads sought early input from oversight committees on the objective and approach of each initiative.
• Initiative leads adopted a consultative approach to pursuing initiatives, obtaining and incorporating input from departmental stakeholders as appropriate.

The audit team did find that some of the initiatives reviewed would have benefited from strengthened project management regimes. Without a formal approach to support the identification, approval, implementation and monitoring of initiatives, the planning and management of specific initiatives was left to initiative leads. The audit team found that project management was not always commensurate with the nature and complexity of the initiative (for example, the lack of a well-defined work plan, critical path, timelines, and work breakdown structure for an initiative expected to have a significant impact on multiple branches). Adopting and maintaining an approach to initiative implementation that considers the scope, scale and risks of the initiative being undertaken helps to ensure timely completion and achievement of results.

Finally, the audit team found that initiatives were not always clear or consistent in the nature and frequency of reporting to oversight committees.  As noted in Section 2.2, this was due in part to the approach to harmonization adopted by the Department and the lack of a shared understanding of roles and responsibilities by oversight committees vis-à-vis streamlining and harmonization efforts. Well-defined monitoring and reporting requirements help ensure that identified initiatives are regularly reaffirmed and progressing as planned, and that oversight bodies are positioned to provide a robust challenge function.

Recommendation:

3. The central platform for G&C administration should establish guidelines and a structured approach to support the management and implementation of specific initiatives, including an escalation mechanism for addressing appropriate concerns raised by departmental stakeholders so initiatives can progress as appropriate.

3. Additional opportunities to streamline and harmonize

Over the course of the audit, new opportunities to streamline, standardize, and harmonize G&C program delivery and administration were identified by the audit team. To assist the Department and senior management in their further efforts to improve G&C programming, these opportunities have been documented and analyzed, and are presented in Appendix C of this report. It should be noted that the work completed by the audit team to document and assess these opportunities was advisory in nature and does not provide audit level assurance.

Opportunities were identified by the audit team based on document review and interviews and is therefore not an exhaustive list. Appendix C dedicates one page to each opportunity, providing the following information:

• A summary description of the opportunity;
• A summary of the current state of policies, processes, procedures, practices and/or systems relative to the opportunity;
• Control weaknesses that exist (or may exist) relative to the current state;
• Notional solutions that may exist relative to the opportunity;
• Potential benefits to be realized in pursuing the opportunity;
• Potential challenges or obstacles in pursuing the opportunity;
• Potential cost(s) of implementing the opportunity^{Footnote 10}; and
• The risks (or opportunity cost) of not pursuing the opportunity.

The potential benefits, challenges and costs of each opportunity were further ranked by the audit team as high (H), moderate (M) or low (L), based on the information accumulated. These rankings, along with an identification of the more common expected benefits of each opportunity, are summarized in Table 3 on the following page. The opportunities are organized in the table and in Appendix C along a common program design and delivery continuum. Highlighted in the table are those opportunities identified as having ‘high’ potential benefits for all programming streams. They include:

1. Departmental platform for policies, processes and tools (H, L, L)
2. Establishing a departmental policy/directives (H, M, L)
3. Functional analysis and realignment of G&C support functions (H, M, M)
4. Streamlining capacity/risk assessment processes (H, M, M)
5. Harmonizing systems for recipient relationship management (H, M. H)

As stated, this analysis is provided for the sole purpose of assisting the Department and senior management in its efforts to further improve G&C programming. The identification and analysis of these opportunities was supplemental to the audit and is based on the information auditors gathered while conducting the audit. The criteria used to analyze identified opportunities and their resulting ‘scores’ are provided for illustrative purposes only. Management may choose to consider other criteria and/or may rank them differently.

4. Conclusion

Departmental processes for identifying and pursuing opportunities, where appropriate, to streamline, standardize and harmonize G&C program administration were inadequate and were not effective to meet PTP requirements. Given the substantial and diverse G&C programming that exists across the Department, achieving sustaining progress toward streamlined, standardized and harmonized G&C program delivery and administration will require the following:

• Documenting and communicating a clear vision and transformation plan for the harmonization of G&C administration practices;
• Appoint a central platform for guidance and coordination for G&C reform that includes all programming streams;
• Ensuring the authorities and responsibilities assigned to the central platform are appropriate and sufficient to direct and oversee horizontal change initiatives designed to harmonize G&C program administration; and
• Ensuring guidelines and a structured approach to support the management and implementation of specific initiatives, including an escalation mechanism for addressing appropriate concerns are established.

Appendix A: About the audit

Objectives, criteria, scope and methodology of the audit

Objectives and criteria

The objective of the audit is to provide assurance on the adequacy and effectiveness of departmental processes for identifying and pursuing opportunities, where appropriate, to streamline, standardize and harmonize G&C program administration.

The following criteria were established:

• Responsibilities and accountabilities for identifying and acting on opportunities to streamline, standardize and harmonize G&C program administration are clearly documented and aligned.
• Departmental management committees and decision-making processes support the identification and implementation of opportunities to streamline, standardize and harmonize G&C program administration.
• Initiatives to streamline, standardize and harmonize G&C program administration are supported by appropriate direction, delegation, planning, reporting and oversight.              
• Departmental processes support the design of program control frameworks that balance program responsiveness with the need to ensure a consistent approach to risk and avoid undue burden placed on agreement recipients and program operations staff.

Scope

The scope of the audit included departmental initiatives to streamline, standardize and harmonize G&C program administration undertaken between April 1, 2015 and March 31, 2017. The audit also considered the support provided by departmental management committees and decision-making processes for identifying and pursuing opportunities to streamline, standardize and harmonize. While the audit considered the processes, roles and responsibilities currently in place to identify and pursue opportunities within the Department, it did not considered processes, roles and responsibilities in place to identify and pursue opportunities with other Federal Government departments.

Some G&C payments are mandated by statutory requirements or legislation (i.e. assessed contributions). Due to their very low levels of fiduciary and recipient risks, these payments were considered outside of the scope of the audit, and thus their management and administration was not be covered by the audit. These amounts represent assessed contributions, quasi assessed contributions, and payments to International Financial Institutions.

Over the course of the audit, opportunities to streamline, standardize, and harmonize G&C administration were brought to the attention of the audit team. These opportunities were gathered, synthesized and presented separately from the audit results (for example in an Annex to the Audit Report). Further, opportunities identified may extend to assessed contributions or other areas formally outside the scope of the audit.

Methodology

The audit used the following methodologies for gathering evidence against the audit criteria:

• Policy analysis;
• Process review and mapping;
• Information analysis and consolidation;
• Gap analysis;
• Document review;
• Interviews with Departmental officials and program staff; and,
• Other tests as deemed necessary.

Appendix B: Identified initiatives

The table below lists and describes initiatives pursued since amalgamation to improve G&C management and administration through streamlining, standardization and/or harmonization efforts. The list was compiled from interviews and document review, including (in particular) initiatives presented to Programs Committee and Directors General Programs Committee as per their Records of Decision. The first six initiatives represent those subject to more detailed review during the audit examination phase.

It should be noted that many of these initiatives are ongoing and not all of those finalized resulted in changes to G&C management and administration. Also, other initiatives may have been pursued which are not included below as they were not identified during interviews and document review.

Appendix C: Identified opportunities

As noted in section 3 of the report, seventeen potential opportunities to streamline, standardize and harmonize G&C program administration were identified over the course of the audit. It would not be feasible or advisable for the Department to pursue all of these opportunities because the potential strain and cost of change would be more than the organization could reasonably absorb. To support management’s decision making about where to focus G&C transformation activities, a one-page analysis of each opportunity is provided in this Appendix. The identification and analysis of these opportunities was supplemental to the audit and does not provide audit level assurance.

1. Establish Departmental G&C Policy/Directive(s)

Establish overarching departmental policy requirements to define authorities, roles, responsibilities, and minimum control requirements for program design and delivery.

Current State

• The Department does not have a departmental directive or policy statement for G&C program design and delivery
• Authorities, roles, responsibilities and control practices vary by G&C programming stream (and by program within the foreign affairs (FA) stream)
• Modus is intended as a repository for all departmental business process and their related policies and directives, much of which is dedicated to G&Cs, including stream-specific policies and direction
• Information in Modus is not complete (i.e. not all of the information in Modus is up-to-date and program staff do not necessarily rely on information in Modus)

Notional Solutions May Include

• Establish a departmental Directive(s) on the Design and Delivery of Transfer Payments
• Updated Terms of Reference for management committees to make roles and responsibilities vis-à-vis G&C programs more explicit
• Develop a Management Control Framework for Grants and Contributions that describes the requirements and practices for designing and delivering transfer payment programming, including variations where these exist

Control Weaknesses in Current State

• Roles and responsibilities of those designing and delivering G&C programs, and those providing functional supports, differ by stream and program (i.e. results in inconsistent management practices and difficulty in developing common systems, tools and guidelines)
• Ambiguity exists in the role of Corporate Planning, Finance and IT Branch (SCM) over the departmental G&C control framework, impacting the Branch’s effectiveness in leading/supporting horizontal change initiatives
• There is a lack of clarity in the authorities and responsibilities of the bureaus/divisions that provide functional supports to Branches responsible for program design and delivery

Potential Benefits to be Realized High Potential Impact

• Opportunities to strengthen, streamline and harmonize G&C programming will be proactively identified, weighed, and acted upon, where appropriate
• Departmental directives, aligned with and complementary to the Policy on Transfer Payments (PTP), would ensure clarity of roles and responsibilities for those involved in designing and delivering G&C programming across all streams
• Clear roles, responsibilities and authorities would promote strong collaboration and coordination in the administration of G&Cs (i.e. less opportunity for friction arising from gaps in the system)

Potential Challenges/Obstacles of Pursuing this Opportunity Moderate Potential Challenges

• May be challenging to secure buy-in of all programming Branches for increased central management and oversight (i.e. could be perceived as giving up control and flexibility at the program and stream levels)
• May experience change aversion if this involves the standardization of some processes, procedures and practices

Potential Costs of Implementing this Opportunity Low Potential Cost

• While costs for this activity are low, it would first require establishing a vision for reforming G&C administration and then the dedicated attention of all senior executives and direction and oversight of Deputy Ministers

Opportunity Costs and Risks of not Pursuing this Opportunity

• Impediments to streamlining, integrating and harmonizing G&C programs and practices
• Failure to identify significant control gaps before they have financial impacts
• Inconsistent practices being levied upon G&C recipients, leading to frustration

2. Functional Analysis and Realignment of G&C Support Functions

Perform a gap analysis of the G&C support functions needed by Branches and staff that design and deliver G&C programming. This would include evaluating alignment of roles and responsibilities of the various bureaus, divisions and oversight committees which provide G&C functional supports and oversight.

Current State

• The programming streams (development, FA, trade) do not have access to the same levels of services/supports from centralized or stream-specific G&C support functions due to historical funding allocations
• G&C support functions are centralized for development programs (e.g. gender specialists, IT, contracting, etc.)
• Similar support functions under the FA and trade streams (if they exist) are embedded within program Branches or other organizational units (e.g. the environmental resource that supports FA programs is currently located in the Cabinet and Parliamentary Affairs division)
• CFO provides guidance and oversight over G&Cs in the development stream, with built-in checks and balances at specific intervals throughout the investment life cycle, but only plays a consultative role in FA and trade streams

Notional Solutions May Include

• Review existing G&C functional supports to identify gaps and opportunities for harmonization and streamlining
• Evaluate whether and where realignment is needed to improve direction, support, guidance, and monitoring/supervision for G&C programming
• Document processes and update mandates for G&C functional supports and realign responsibilities and resources for G&C functional supports as required

Control Weaknesses in Current State

• Different approaches and policy interpretations have emerged in the different streams
• Where functional supports differ by stream, in terms of level and organizational positioning, it is inherently challenging to improve consistency in program practices and the requirements placed on recipients
• SCM has a very limited mandate for monitoring control practices in the trade and FA streams
• Differences in policy interpretation and practices can lead to inconsistencies in funding agreement terms and conditions, risk tolerances and the type and level of recipient administrative requirements (i.e. lack of consistency in the risk-based and needs-based requirements levied on recipients)

Potential Benefits to be Realized High Potential Impact

• Greater consistency and transparency in the requirements and policy interpretations that impact upon departmental recipients, leading to improved recipient relationships
• Improved economies of scale and efficiencies in program delivery

Potential Challenges/Obstacles of Pursuing this Opportunity Moderate Potential Challenges

• Would require consideration of organizational design and movement of some responsibilities and resources 
• It may be challenging to secure buy-in of all programming Branches if they perceive changes as reducing their control and flexibility
• May experience change aversion where individual roles, responsibilities and organizational positions are changing
• Potential impact on program responsiveness

Potential Costs of Implementing this Opportunity Moderate Potential Cost

• Such an initiative would require considerable time and effort on the part of program managers and directors, as well as G&C support functions
• Availability of those providing common support functions

Opportunity Costs and Risks of Not Pursuing this Opportunity

• Differences in how the programming streams apply the Policy on Transfer Payments
• Risk of undetected control gaps and inappropriate segregation of duties

3. Harmonized Program Terms and Conditions

Harmonized Terms and Conditions (T&Cs) for G&C programming to enhance program coherence, consistency and nimbleness.

Current State

• Limited progress made on harmonizing T&Cs since amalgamation, despite having been an initiative pursued by SGD in 2014/15 (i.e. SGD mapped and analyzed differences and similarities between program T&Cs to determine the potential for harmonization and efficiency gains)
• When a program comes up for renewal, or adjustments are made or new programs are considered, SCM plays a challenge function which includes consideration of whether the program can be consolidated with another
• The recent International Assistance Review (IAR) noted the Department’s threat reduction and stabilization programs are subject to multiple sets of T&Cs as well as frequent and resource-intensive renewals
• International Development Assistance (development stream) and majority of funding under the Peace and Security Operations Program (PSOP) constitute Official Development Assistance (ODA) funding and yet have different T&Cs

Notional Solutions May Include

• Harmonization could be achieved in a variety of ways, including creating:
  • a common umbrella T&C for all programs; or
  • 3 stream-based T&Cs or some other subset; or
  • standardization and harmonization of the many existing program T&Cs to enhance their interoperability and consistency

Control Weaknesses in Current State

• Multiple Program T&Cs make it increasingly challenging to respond to the unique needs of partners (i.e. aligning investments across programs, aligning with other donors/funders, and adjusting programs nimbly to respond to new government priorities)

Potential Benefits to be Realized Moderate Potential Impact

• Harmonizing Program T&Cs (i.e. making them interoperable and consistent) or establishing common T&Cs (blended set(s) of program T&Cs for all transfer payment programming) would make it easier to:
• align and integrate programs;
• align investments and/or pool funds across programs;
• align investments with other donors/funders (i.e. provided these T&Cs were more broad);
• adjust programs nimbly in response to new government priorities

Potential Challenges/Obstacles of Pursuing this Opportunity Moderate Potential Challenges

• The Department will need to demonstrate to Treasury Board that it’s G&C control systems are robust enough to warrant increased flexibility
• Focusing on harmonization of T&Cs could reduce time/attention for other pressing requests of Treasury Board
• There may be reluctance on the part of program Branches given past efforts to harmonize T&Cs

Potential Costs of Implementing this Opportunity Moderate Potential Cost

• Harmonized T&Cs will require significant policy work on the part of the Department, including preparation of one or more TB submissions (may be challenging to accomplish this within the existing government mandate)

Opportunity Costs and Risks of Not Pursuing this Opportunity

• Missed opportunities to enhance program investments and collaborate with other donors/funders

4. Harmonized Systems for Recipient Relationship Management

Harmonize the processes, systems, and tools for gathering, storing, accessing and sharing recipient information and correspondence.

Current State

• No centralized repository exists for collecting, storing and sharing recipient information across Department
• Many recipients receive funding under multiple programs, but are subject to separate and varied processes for proposal intake and assessment, project development, agreement management and results reporting
• Separate and distinct recipient relationship management tools, practices, and systems are maintained by programming stream and program – most are not specifically linked to financial or other systems
• Client-facing systems and approaches include: Partners@International Portal, the Global Commerce Portal, and the newly established Partnership Leads approach for some strategic partners
• Relationship management tools and systems (not client facing) include: Fiduciary Risk assessment database, Security and Stability Project Management Tool used by FA programs, recipient audit processes, Trio-the customer relationship management portal for trade, etc.

Notional Solution May Include

• Identify and agree on the functions and information that should be harmonized into a relationship management system (e.g. might include basic organizational data, recipient correspondence, records of conversations with recipients, risk and capacity assessments, and results of past/ongoing recipient projects)
• Consider off-the-shelf and existing GoC systems (i.e. already created by other government departments)

Control Weaknesses in Current State

• Existing proposal solicitation and evaluation processes vary by stream/program and consider proposals independently of one another (i.e. results in risk that applicants are approved for more projects than they have the capacity to manage)
• Recipients are required to provide some information multiple times in varying formats, potentially resulting in avoidable administrative burden
• Department cannot fully benefit from lessons learned with a recipient (i.e. loss of corporate knowledge)
• There is no consistent Departmental approach to recipients with multiple projects under various programs

Potential Benefits to be Realized High Potential Impact

• Enhanced recipient relationships achieved through a “tell us once” principle” (i.e. more efficient client interactions, reductions in negative client interactions, reduced burden on recipients)
• Stronger records to support future compliance and audit work
• Enable anyone in the Department to have an at-a-glance view of the Department's relationship/ interactions with a client/recipient
• More information sharing within department to benefit project officers (learning from prior experiences)

Potential Challenges/Obstacles of Pursuing this Opportunity Moderate Potential Challenges

• High costs and significant dependencies on corporate functions (e.g. IM/IT services)
• Mature, ongoing project management efforts will be required (a clear project lead would likely be needed and would need dedicated resources from all program areas)
• Initial increased burden on program staff, recipients while developing systems, processes, and tools
• Varying information needs and management practices of programs may create difficulties in obtaining buy-in
• Significant, ongoing information and data management efforts will be required in development

Potential Costs of Implementing this Opportunity High Potential Cost

• High cost and effort of procuring, developing, customizing and implementing a common system that interfaces with other existing systems and processes
• High costs associated with training and roll-out

Opportunity Costs and Risks of Not Pursuing this Opportunity

• Maintaining multiple systems is costly due to ongoing maintenance and training staff for multiple systems
• Difficult to efficiently improve controls for reviewing agreements (i.e. for completeness and appropriateness of terms and conditions)

5. Streamline/Harmonize Proposal Processes, Cycles and Systems

Streamline and harmonize proposal solicitation processes and systems, sequencing, cycles, ensuring consistency of proposal solicitation processes, harmonization of annual proposal cycles and increased automation.

Current State

• Proposal cycles/deadlines vary by program/stream, and various processes and systems exist for proposal submission (i.e. varied practices and degrees of automation)
• A partners@international portal is in place (development stream primarily) which allows potential recipients to register their organizations and submit funding requests online (either in response to a call for proposals or as an unsolicited proposal)
• Some programs have individualized proposal submission systems (e.g. Global Opportunities for Associations program within the trade stream has a “dotnet” system for full lifecycle project management including proposal submission)

Notional Solution May Include

• Develop a common cycle for proposal solicitation, submission, evaluation and decisions
• Establish internal and external service standards
• Make use of the common portal (bridge to existing program systems) or system (complete new system) for proposal solicitation
• Fully integrate mechanisms for recipients to track status of proposal evaluation

Control Weaknesses in Current State

• Varied proposal submission processes that create burden on recipients
• Funding decisions are not always made in a timely manner, with limited means for ensuring that service standards are being met and controls are being adhered to
• Potential inefficiencies in maintaining multiple systems designed for similar or same purposes

Potential Benefits to be Realized Moderate Potential Impact

• Improved client/recipient experience, both in terms of ease of use and time spent to submit proposals
• Opportunity to make better use of information previously provided by applicants/recipients

Potential Challenges/Obstacles of Pursuing this Opportunity Low Potential Challenges

• Significant dependencies on corporate functions (i.e. coordination bodies; IM/IT services, etc.)
• Substantial differences in existing program processes will likely mean high levels of change aversion
• Will require senior leadership and oversight to ensure processes are effectively and efficiently streamlined, harmonized and automated

Potential Costs of Implementing this Opportunity Moderate Potential Cost

• Initial increased burden on program staff while developing systems, processes, and tools
• Cost of moving manual and/or divergent processes, to automated Departmental process/system could be significant (although some progress has already been made with partners@international and GOA portals)
• Cost to be incurred in communicating new process to potential recipients; cost of training staff

Opportunity Costs and Risks of Not Pursuing this Opportunity

• Inability to identify when multiple proposals are received from same recipient across all programming streams
• Inability to establish and adhere to service standards

6. Streamline/Harmonize Proposal Evaluation and Funding Decision Processes

Streamline/harmonize proposal evaluation and funding decision processes, evaluation methodologies, and evaluation practices and tools to improve consistency of approach across programs.

Current State

• The APP standardizes proposal evaluation and selection processes across the development stream; embeds key controls within the process (such as those exercised by SCM), however, these processes are seen as cumbersome, inflexible, and risk-averse for application in the other streams
• Dedicated APP team in DPD (formerly in SGD) is working to address issues within the development stream
• Evaluation and selection processes are program specific within the FA stream, although work is underway to align IFM processes with those of the development stream
• Trade stream evaluation and selection processes are reasonably well-defined, but not integrated with other departmental processes

Notional Solution May Include

• Perform further review to identify specific opportunities for streamlining and harmonizing proposal evaluation processes, methodologies and tools
• Establish a single decision framework to guide the process, and review requirements and authorities for decisions (should be considerate of recipient capacity, materiality of investment, risk of project, etc.)
• Establish minimum departmental standards for documenting funding decisions 

Control Weaknesses in Current State

• Development processes impose a burden on partners and staff, and are seen as limiting innovation and partnership
• Limited monitoring controls within FA and trade evaluation and selection processes to ensure defined processes are consistently followed

Potential Benefits to be Realized Moderate Potential Impact

• Improved efficiency of processes within the development stream
• Improved controls and oversight within processes of FA and trade streams
• Common processes, vocabulary, and understanding across programming streams to meet GoC policy requirements, mobility of staff across programs, and training

Potential Challenges/Obstacles of Pursuing this Opportunity Moderate Potential Challenges

• Diversity in the nature and objectives of programs may make it difficult to establish common processes and methodologies (i.e. may require distinctions-based approaches)
• The policy framework that underpins the various program processes is different
• Some program T&Cs define key elements/requirements of the proposal evaluation and selection process and therefore may have to be amended
• Resistance to change by programs/streams
• G&C support functions that support the processes may not be able to handle increased workload if functions are centralized

Potential Costs of Implementing this Opportunity High Potential Cost

• Establishing harmonized processes will require input from all programs and support functions

Opportunity Costs and Risks of Not Pursuing this Opportunity

• Inefficiencies in current processes will continue
• Lack of key controls to help ensure compliance with PTP

7. Streamline Capacity/Risk Assessment Processes

Streamline capacity and risk assessment processes (recipient capacity, fiduciary risk, project/investment risk, country risk, and program risk).

Current State

• Across development stream, SCM is responsible for directing and overseeing fiduciary risk management and providing centralized approaches, tools and systems (e.g. FRET)
• Roles and responsibilities of SCM vis-à-vis the FA and trade streams are not clear, with programs in these streams using Branch and/or program specific processes and tools to assess project and recipient risk
• PFM/SCM Branch is developing the Harmonized Risk Management Tool (HRMT), with the intent of implementing for all streams and programs. While there is evidence that programs within the FA stream intend to use the tool (they are actively involved in consultations and have participated in simulations), programs within the trade stream are concerned that the tool may not meet their needs

Notional Solution May Include

• Consistent methodologies and approaches for calculating, validating and documenting risk assessments
• Standard practices for review and quality assurance of assessments
• Harmonized tools and systems for performing risk assessments
• Harmonization of risk-based program administration requirements and practices (e.g. agreement conditions, recipient reporting, cash flow practices, compliance monitoring, hold backs, etc.)

Control Weaknesses in Current State

• With stream and program specific risk assessment practices, there is increased risk that some programs have risk tolerances that exceed or fail to meet the departmental risk tolerance
• Potential for recipients to be asked for information multiple times or not at all
• Programs are not benefiting from fulsome information and assessments on a recipient that accesses multiple programs
• Projects and/or recipients with similar risk exposures and risk levels may face different degrees of risk monitoring and risk mitigation

Potential Benefits to be Realized High Potential Impact

• Requirements and expectations placed on recipients and partners are consistent with the department’s risk tolerances
• Reduced time and cost spent on maintaining different risk tools and methodologies

Potential Challenges/Obstacles of Pursuing this Opportunity Moderate Potential Challenges

• Attention will need to be paid to ensuring that processes are not too burdensome on programs with low risk exposures
• Senior level direction and coordination will be required to ensure buy-in and optimization of results

Potential Costs of Implementing this Opportunity Moderate Potential Cost

• Extensive involvement will be required by all programs and G&C support functions
• Costs of designing, developing and implementing necessary system functionality in SAP
• Centralized G&C support functions (SCM) will have a permanent increase in responsibilities and operating costs

Opportunity Costs and Risks of Not Pursuing this Opportunity

• Costs associated with continued support of multiple processes, systems and tools
• Projects and recipients with similar risk profiles continue to be managed differently
• The impact on other harmonization initiatives that might depend on this opportunity being fully implemented

8. Streamline/Harmonize Practices for Department-Initiated Projects

Define departmental processes/practices (including guidelines according to the nature of the program, project, and/or recipient as required) for developing Department-initiated projects.

Current State

• Limited information was gathered by the audit team on the current state of departmental processes and practices for Department-initiated projects
• APP defines and describes processes and procedures for such projects under the development stream – although different development Branches may have put in place additional procedures
• Time available to initiated projects varies significantly between the development and FA streams – development projects are larger in dollar amount and tend to be less time sensitive; FA projects are smaller and time sensitive (i.e. in response to an emerging issue, need or crisis)

Notional Solution May Include

• Establish guiding principles and minimum control and governance expectations for Department-initiated projects
• Establish one or more common practices for development of projects to protect staff and the Department from real and perceived conflicts of interest and improprieties

Control Weaknesses in Current State

• Limited information was gathered by the audit team on the current state of departmental processes and practices for Department-initiated projects

Potential Benefits to be Realized Moderate Potential Impact

• Reduction in time required to develop projects would enhance project effectiveness and reduce burden on recipients and partners
• Ensure that key controls are in place to meet GoC policy requirements and ensure achievement of program objectives/results
• Increase coherence in delivery of international programming across development and FA streams

Potential Challenges/Obstacles of Pursuing this Opportunity Low Potential Challenges

• Diversity in the nature and objectives of programs may make it difficult to establish common processes and methodologies (i.e. may require distinctions-based approaches)
• Resistance to change by programs/streams
• Increased workload for G&C support functions that support the processes

Potential Costs of Implementing this Opportunity Moderate Potential Cost

• Aligning processes within and across programming streams will require consultation and involvement from various programming Branches
• Changes to processes, procedure and practices of some programs – to align with the new process – will require time and effort on the part of program staff and management

Opportunity Costs and Risks of Not Pursuing this Opportunity

• Lengthy timelines for project development continue, reducing the responsiveness and effectiveness of projects
• Continued concern over adherence to GoC policy requirements

9. Common Funding Agreement Models and Conditions

Developing and rolling out department-wide funding agreement models, including the implementation of a centralized review and/or approval function for agreement text deviations (note: this opportunity could be implemented with or without Opportunity 10).

Current State

• For the development stream, SCM manages funding agreement models and approves all text deviations
• For the FA and trade streams, programs draft and manage funding agreements from established templates, seeking advice from legal services and from the G&C Centre of Expertise within CFOB when contemplating deviations from templates

Notional Solution May Include

• Review variations in agreement terms and conditions with programs, SCM, Centre of Expertise, and Justice to understand the need for variations
• Develop common funding agreement and approved text deviations, including circumstances and risk profiles where the various text deviations are appropriate
• Establish process and authorities for use of text deviations and approval of new text deviations

Control Weaknesses in Current State

• Potential for programs to inadvertently or intentionally modify agreements, including removing or amending conditions, in a manner that exposes the Crown
• Potential for some programs to create more onerous or burdensome conditions in agreements than are necessary to mitigate identified risk
• Recipients receiving funding under multiple streams or programs are subject to agreements with varying terms and conditions, creating confusion and inefficiency in administering the agreements
• Department staff have a steep learning curve when moving between programs and delivering multiple programs

Potential Benefits to be Realized Moderate Potential Impact

• Mandatory funding agreement models and a centralized review/approval function for text deviations helps ensure agreements are meaningful, complete and consistent across programs
• Reduced burden on recipients that have multiple projects with the Department
• Represents a strong platform for developing and implementing streamlined and harmonized processes and practices in other areas

Potential Challenges/Obstacles of Pursuing this Opportunity Low Potential Challenges

• Implementing mandatory model funding agreements will require care to ensure the programming requirements of individual programs in the Department are adequately reflected
• A centralized bureau/division as “the owner” of models and responsible for reviewing and approving text deviations will require realignment of processes and authorities
• Resolving issues with respect to template ownership

Potential Costs of Implementing this Opportunity Moderate Potential Cost

• Extensive involvement will be required by all programs and G&C support functions
• Costs of designing, developing and implementing the agreements, text deviations and systems will be significant
• Centralized G&C support functions (CFOB) will have a permanent increase in responsibilities and operating costs

Opportunity Costs and Risks of Not Pursuing this Opportunity

• Continued burden of recipients with multiple agreements – potential negative impressions of department by recipients
• Increases instances of inappropriate terms and conditions within funding agreements, and potential inability to recover funds in some instances

10. Automation of G&C Agreement Development

Automation of G&C agreement development, further to the development of mandatory model funding agreements (note: would need to be completed in conjunction with Opportunity 9, common funding agreement model(s) and conditions).

Current State

• Funding agreements templates exist for each G&C program in the Department, however templates exist as Word documents with no automation within the agreement development process
• The GOA program in trade stream has a dotnet system that supports everything from application submission to recipient reporting – may include automated agreement development

Notional Solution May Include

• Develop a new system, or expand upon an existing system, to automate agreement creation across the department, including linking to the electronic financial authorities matrix

Control Weaknesses in Current State

• Use of various Word templates and an absence of mandatory review of all agreements (i.e. trade and FA streams) increases risk that agreement conditions will not be appropriate for the circumstances and risk profile of the recipient and project/investment.

Potential Benefits to be Realized Moderate Potential Impact

• Funding agreements contain appropriate terms and conditions, both protecting the Crown and not placing undue burden on recipients
• Streamlining of the agreement creation process (simplified and expedited)
• Would allow for key controls relating to agreement review and approval to be embedded into the process

Potential Challenges/Obstacles of Pursuing this Opportunity Low Potential Challenges

• Significant dependencies on corporate functions (i.e. coordination bodies; IM/IT services, etc.)
• Mature, ongoing project management efforts will be required
• Initially, increased burden on program staff while developing systems, processes, and tools
• A centralized bureau/division as “the owner” of the automated process will require department-wide authority

Potential Costs of Implementing this Opportunity High Potential Cost

• High cost and effort of procuring, developing, customizing and implementing a common system that interfaces with other existing systems and processes
• High costs associated with training and roll-out

Opportunity Costs and Risks of Not Pursuing this Opportunity

• Funding agreements do not contain complete, appropriate and compliant terms and conditions, and lack consistency
• Funding agreements take time to develop, with key steps repeated each time rather than automated

11. Departmental Guidelines and Streamlined Practices for Funding Instrument/Modality

Develop department-wide policy(ies) and/or guideline(s) for the consistent selection of funding instruments/modalities (e.g., grant, contribution, repayable contribution, etc.).

Current State

• Funding instrument selection is governed by Program Terms and Conditions and the use of risk assessment tools (such as the FRET and other program-specific assessments)
• In some cases, program staff have the flexibility to override recommendations of risk assessment tools, selecting the funding mechanism most appropriate to the situation
• There is currently no department-wide policy for determining the type of funding instrument/modality, although a process exists for the Development stream
• The department is in the process of reviewing and developing related financial policies (i.e. cost-sharing, overhead/cost-disaggregation, repayable contributions)

Notional Solution May Include

• Review nature and risk profiles of programs across all streams through consultation with programs, SCM, Centre of Expertise to understand options for streamlining use and selection of funding instruments/modalities
• Develop a directive on the selection of funding instruments/modalities (recognizing that some programs do not have access to all types of instruments)
• Establish process, criteria and authorities for use and selection of funding instruments/modalities

Control Weaknesses in Current State

• Across programs, variations in selection of funding instruments/modalities, despite similar project and recipient risk profiles

Potential Benefits to be Realized High Potential Impact

• Maximize use of flexibilities within the Policy on Transfer Payments, potentially increasing efficiency of administering G&C programming and reducing burdens on recipients

Potential Challenges/Obstacles of Pursuing this Opportunity Moderate Potential Challenges

• Drafting policies/guidelines which appropriately account for the broad range of programming contexts and requirements may be time-consuming
• The existing Program Terms and Conditions of programs, may limit the availability of some funding instruments/modalities and/or could require Treasury Board approval of changes or common/harmonized T&Cs

Potential Costs of Implementing this Opportunity Low Potential Cost

• Involvement will be required by all programs and G&C support functions

Opportunity Costs and Risks of Not Pursuing this Opportunity

• Unjustified differences in funding instrument/modality across programs, leading to inefficiency and negative impressions of the department
• Unnecessary burden placed on recipients where appropriate flexibilities are not provided

12. Streamline Recipient Reporting Practices and Systems

Enhance and harmonize recipient reporting practices and systems, including streamlined reporting requirements, and automated and simplified reporting.

Current State

• Limited information was gathered by the audit team on the current state of departmental practices and systems for recipient reporting by G&C program and/or stream
• To the extent that programs are making efforts to streamline, automate and simplify reporting requirements for recipients, these efforts are made on a program by program basis (except possibly within the trade stream) with limited G&C functional support or oversight
• It was noted that even where consolidated T&Cs exist for various programs within the same stream, performance measures and indicators, and expected outputs and outcomes differ by program

Notional Solution May Include

• In concert with implementing the Policy on Results (i.e. Performance Information Profiles), review reporting requirements of the department to determine where reporting systems, templates, and requirements can be streamlined
• Implement harmonized recipient reporting mechanisms, portal and/or system
• Enhance data aggregation and analytics capabilities through a data warehouse, or linkage if  various reporting databases must be maintained

Control Weaknesses in Current State

• Recipient reporting requirements can vary across programs (i.e. may not be sufficiently risk-based as per the PTP and some programs may be demanding more results information than is reasonably necessary for the Department’s parliamentary accountability reporting and agreement administration purposes)
• Recipient reporting is not consistently linking to departmental results reporting and its thematic and other commitments

Potential Benefits to be Realized Moderate Potential Impact

• Reporting requirements of recipients are justifiable and proportionate to risk
• Results reporting is adequate to meet departmental accountability reporting and stewardship obligations
• Minimized burden on recipients

Potential Challenges/Obstacles of Pursuing this Opportunity Moderate Potential Challenges

• Programs may resist losing program information that, while not used for accountability reporting, may be needed to evaluate program performance and relevance in the future
• Diversity of program specific performance measures and indicators, expected outputs and outcomes will make rationalization and alignment inherently challenging

Potential Costs of Implementing this Opportunity Moderate Potential Cost

• Extensive involvement will be required by G&C programs
• Decisiveness will be needed to rationalize reporting requirements, likely requiring interventions of senior officials in the department
• If centralized reporting portals or systems are employed, G&C support functions (CFOB) will have a permanent increase in responsibilities and operating costs

Opportunity Costs and Risks of Not Pursuing this Opportunity

• Suboptimal use of data for decision making purposes
• Difficulty in delivering on all reporting requirements
• Undue burden placed on recipients that prepare report and staff who gather information that is not consistently used for reporting or decision making

13. Streamline Agreement Management and Monitoring Practices

Streamline G&C agreement management processes (e.g. communications with recipients, monitoring activities and compliance activities, etc.) ensuring proportionality to need and risk.

Current State

• For the development stream, the APP  covers project initiation, design, agreement and implementation  (i.e. how projects/agreements are managed and administered after funding agreements are established)
• Within the FA stream, each program manages projects/agreements independently, although efforts are underway to harmonize processes (in particular those of PSOP) to the APP and some tools are used across most programs
• Within the trade stream, programs are using some common “unofficial” processes for administering agreements and processing payments

Notional Solution May Include

• Through consultation across programs, identify opportunities to streamline agreement management practices
• Develop minimum expectations around project/agreement management, with linkages to financial materiality, nature of projects, risk profile of recipients and risk profile of projects/investments
• Develop risk-based administration protocols and practices for application to all programs (e.g. for given circumstance, would determine frequency of communications, monitoring, site visits, compliance reviews)

Control Weaknesses in Current State

• Inefficient project/agreement management means increased workload for already strained resources and/or lack of attention to some areas of higher risk
• Recipients and projects with similar risk profiles may be subject to different levels of monitoring and oversight

Potential Benefits to be Realized Moderate Potential Impact

• Improvements in efficiency (i.e. may be greater opportunity for efficiency in development stream)
• Improved controls and oversight (i.e. may be greater opportunity for oversight of controls within the FA and trade streams
• Common departmental practices would make moving between programs easier (i.e. less steep learning curve and lower training costs)
• Reduced recipient burden

Potential Challenges/Obstacles of Pursuing this Opportunity High Potential Challenges

• The varying complexity and risk-levels of G&C programs across departmental streams necessitates flexibility in approaches to agreement/project management
• Resistance on the part of program management and staff (‘why fix something that isn’t broken’)
• Establishing common processes and embedding them in the G&C management system may increase administrative effort for some lower risk programs, reducing their overall responsiveness to recipients/issues

Potential Costs of Implementing this Opportunity Moderate Potential Cost

• Extensive involvement will be required by G&C programs
• Decisiveness will be needed to rationalize administrative requirements, likely requiring interventions of senior officials in the department
• If common practices and centralized tools/systems are employed, G&C support functions (CFOB) will have a permanent increase in responsibilities and operating costs

Opportunity Costs and Risks of Not Pursuing this Opportunity

• Administrative efforts of department not well aligned to risks and areas in need of attention
• Projects subject to unnecessary or insufficient monitoring and compliance, resulting in increased risk exposure or an unnecessary burden on recipients

14. Departmental Reporting Practices and Tools

Streamline departmental reporting practices and tools to simplify reporting on thematic areas, Government of Canada commitments, IAE/ODA/ODAAA reporting obligations, etc.

Current State

• The Architecture for Results on International Assistance (ARIA) initiative is aiming to establish a conceptual architecture and methodology to link project, program and corporate level outcomes and indicators (i.e.  facilitating roll-up of results for streamlined corporate level reporting)
• This conceptual architecture and methodology existed between geographic country programs and their projects, but does not extend to the corporate level or to other branches
• ODA/ODAAA reporting is made more challenging by the fact that only some PSOP projects are included
• Departmental systems do not automatically aggregate data from all projects, resulting in some heavy manual compilations and calculations for some program areas

Notional Solution May Include

• Continue to advance the ARIA initiative
• Reporting tools fully supporting DPR and RPP requirements, as well as the broader IAE reporting requirements

Control Weaknesses in Current State

• Planning and reporting processes are not fully aligned (i.e. planned results, information gathered and reporting requirements)
• There are many corporate tools/systems for housing data on program results
• Corporate results and indicators can change frequently, making year-over-year comparison inherently challenging

Potential Benefits to be Realized Moderate Potential Impact

• Creates a bridge between programming and corporate level to allow for easier roll-up of results information
• Information more readily available for management decision making (i.e. ability to dynamically report on varied and overlapping measures/indicators without heavy manual compilation and analysis)
• Results and indicators harmonized horizontally across various corporate level documents that set programming direction

Potential Challenges/Obstacles of Pursuing this Opportunity Moderate Potential Challenges

• This is a very complex undertaking due to the varied and overlapping results reporting obligations

Potential Costs of Implementing this Opportunity

• Extensive involvement required by G&C programs
• Decisiveness will be needed to rationalize and align reporting requirements, tools and systems

Opportunity Costs and Risks of Not Pursuing this Opportunity

• Planning and reporting processes remain disconnected
• Level of effort required to support corporate level reporting continues to increase as reporting requirements increase
• Risks of inaccurate and incomplete reporting on results

15. Coordinated and Structured Training for Gs&Cs

Establish a curriculum and training regime to support coordinated and structured training for G&C program delivery and administrative staff.

Current State

• No department wide G&C training regime exists for Program delivery officers/staff
• Department-level training for G&C program staff was reported to cover only the basics of G&C management/administration, with no advanced G&C training available

Notional Solution May Include

• Identify training needs for each of G&C program management staff and G&C program administration staff
• Establish a standardized curriculum, potentially creating stream-specific training and horizontal training
• Develop a training regime (calendar of courses that, taken in sequence, ensure a G&C program or administrative staff have requisite knowledge and skills to perform their duties)

Control Weaknesses in Current State

• G&C program staff have varying degrees of knowledge/experience to discharge their responsibilities
• New staff and staff rotating between programs experience a steep learning curve

Potential Benefits to be Realized Moderate Potential Impact

• Staff responsible for G&C program management and program administration have knowledge and skills to perform their work efficiently and well
• Programs are managed/administered more efficiently and effectively
• Enhanced staff productivity, better mobility for staff and increased morale

Potential Challenges/Obstacles of Pursuing this Opportunity Moderate Potential Challenges

• Programs are currently being managed and administered with different practices, tools and systems, making it more challenging to develop standardized training regimes
• Progress may first need to be made on streamlining and standardizing processes and systems, before coordinated and structured training can effectively be implemented

Potential Costs of Implementing this Opportunity High Potential Cost

• Extensive involvement will be required by all G&C support functions and programs
• Maintenance and delivery of the training will be costly

Opportunity Costs and Risks of Not Pursuing this Opportunity

• Staff do not have sufficient knowledge/experience to perform their tasks efficiently and well

16. Departmental Platform for Policies, Processes, Tools

Ensure a common departmental platform/site(s) exists for G&C policies, directives, guides, processes, requirements, practices, tools, etc. (i.e. could be two sites, one for internal use and one for external publication).

Current State

• Modus is intended as a repository for all departmental business process and their related guidelines, policies and directives, rules and tools – much of which is dedicated to G&Cs
• Modus was a platform that evolved from former CIDA tools and is more complete as it relates to the development stream (i.e. not fully adopted and consistently used for the FA and trade streams)
• Modus provides information on certain G&C policies and processes that exist, identifies the division/bureau that is the business owner of the policy/process, and directs users to tools that exist to support processes
• Policies and processes in Modus are to be validated/updated annually by business owners
• Limited information was gathered by the audit team on the Department’s external platform(s) for communicating program information, policies, processes and guides to applicants/recipients

Notional Solution May Include

• Identify and accumulate all G&C policies, directives, guidelines, processes, practices, and tools
• Program the user interface (if changes deemed necessary to Modus and External Website) and publish content on internal and external sites

Control Weaknesses in Current State

• Processes on Modus and their related guidelines, rules and tools are only as up-to-date as the related business process owner makes them – information in Modus is therefore incomplete and not always current
• Not all program staff rely on information in Modus , relying instead on advice from colleague and past knowledge and experience
• Incomplete information available to external users (applicants, recipients) on G&C policies, directives, guides, processes, requirements, practices, and tools

Potential Benefits to be Realized High Potential Impact

• Provide a more fulsome and complete repository for program staff
• Provide more clear understanding of business process owners (i.e. users will know where to go for help and policy interpretation
• Enhanced transparency and reduced burden for applicants/recipients

Potential Challenges/Obstacles of Pursuing this Opportunity Low Potential Challenges

• Identifying, documenting and approving policies, processes and practices not currently in Modus (internal) or on the web (external) will take time and may be challenging
• Ensuring information in Modus and on the external website remains current will require continuous effort on the part of the bureaus/divisions responsible for maintaining these platforms

Potential Costs of Implementing this Opportunity Low Potential Cost

• Staff time required to locate and/or document polices, processes and tools not currently in Modus or on the web likely to be significant
• Ongoing costs of maintaining Modus and web platforms will increase as these repositories become more fulsome and complete

Opportunity Costs and Risks of Not Pursuing this Opportunity

• Continued inefficiencies and potential for misunderstanding of departmental policy requirements
• Increased burden on recipients and applicants due to lack of current information on departmental policies, directives, guides, processes, requirements, practices, tools, etc.

17. Streamline G&C Manuals/Guides

Streamlining G&C program manuals/guides to ensure consistency of format, centralized access, version control and dissemination, change notifications, easy electronic access and searching, etc.

Current State

• The development of program manuals and/or guides is centralized for some programs/streams (e.g. DPI is responsible for the development stream), while some programs develop their own guides and manuals
• Formats and content vary by program, with no G&C support function providing department-wide direction or advise on required structure, format and content
• In addition to manuals, application guides and handbooks are also often also prepared for recipients, and these come in various formats

Notional Solution May Include

• Determine the extent to which there is benefit in harmonizing and streamlining program manuals and guides
• Develop minimum required elements, common format and common lexicon/vocabulary for manuals/guides
• Establish review and approval process to ensure timely updates to manuals/guides (both initially and ongoing)
• Potentially, introduce automation to simplify access to guides both internally and externally

Control Weaknesses in Current State

• The adequacy and completeness of program guides and manuals varies by program
• Program officers may not be using the most up-to-date version of manuals/guides for program administration

Potential Benefits to be Realized Moderate Potential Impact

• Consistency in guides/manuals reduces training/learning time for staff and improves mobility between programs
• Would make it easier to have staff administer multiple programs simultaneously, potentially improving efficiency
• Consistency of content and central approval helps to ensure adherence to departmental policies, directives and approaches
• Centralized access and version control ensures program staff are relying on the most recent version of manuals/guides, and supports ease of access

Potential Challenges/Obstacles of Pursuing this Opportunity Moderate Potential Challenges

• There will be heavy burden on the bureau/division assigned responsibility for centralized review of manuals/guides, version control and dissemination of change notifications
• Potential resistance from program managers that do not see the benefits of standardization
• Efforts may first need to be made to streamline and harmonize processes and procedures across programs, before the streamlining of manuals and guides can be effective

Potential Costs of Implementing this Opportunity Moderate Potential Cost

• There will be extensive work for all programs to update and/or develop their manuals and guides in the new common format
• Ongoing cost associated with maintaining a centralized repository, ensuring version control, and review and approval of future changes

Opportunity Costs and Risks of Not Pursuing this Opportunity

• Inconsistencies in program management and administration
• Greater risk of non-conformance with the PTP and departmental G&C policies/directives

Appendix D: Management action plan

Appendix E: Acronyms

ADM

Assistant Deputy Minister

APP

Authorized Programming Process 

CFO

Chief Financial Officer

CIDA

Canadian International Development Agency

CMP

Change Management Plan

DFAIT

Department of Foreign Affairs and International Trade

DGPC

Directors’ General Programs Committee

DPD

International Assistance Operations Bureau

ExBo

Executive Board

FRET

Fiduciary Risk Assessment Tool

G&C

Grants and Contributions

HRMT

Harmonized Risk Management Tool

ICF

Integrated Country Frameworks

KFM

Partnerships for Development Innovation

OCAE

Office of the Chief Audit Executive                                

ODA

Official Development Assistance

OPI

Office of Primary Interest

PAM

Project Approval Memorandum

PC

Programs Committee

PCC

Program Coherence and Effectiveness Division

PFM

Strategic Policy Branch

PSOP

Peace and Security Operations Program

PTP

Policy on Transfer Payments

RPM

Review of Programming Mechanisms

SCM

Corporate Planning, Finance and IT

SGD

Grants and Contribution Management Bureau

SGF

Financial Management Grants and Contributions

SGP

Grants and Contributions Policy

T&C

Terms and Conditions

TBS

Treasury Board Secretariat