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Section II—Strategic Framework and Planning Priorities

Our strategic framework and results chain

The strategic framework of the Office of the Auditor General (OAG) presents our vision and the values that guide our work (Exhibit 3).


Exhibit 3—The strategic framework of the Office of the Auditor General of Canada

Our vision

An independent audit office serving Parliament, widely respected for the quality and impact of our work.

We promote

  • accountable government,
  • an ethical and effective public service,
  • good governance,
  • sustainable development, and
  • the protection of Canada's legacy and heritage.

We do this by

  • conducting independent audits and studies that provide objective information, advice, and assurance to Parliament, the government, and Canadians;
  • working collaboratively with legislative auditors, federal and territorial governments, and professional organizations; and
  • providing a respectful work place in which our diverse workforce can strive for excellence and realize their full career potential.

Our values are

  • serving the public interest,
  • independence and objectivity,
  • commitment to excellence,
  • respectful workplace,
  • trust and integrity, and
  • leading by example.

We use a results chain to describe our strategic outcome and to show how we expect to make a difference. The long-term strategic outcome of the Office of the Auditor General is to contribute to better-managed government programs and better accountability to Parliament through our legislative auditing. The results chain connects what we do (conduct audits and other assessments) and what we deliver (audits, studies, opinions, information, and advice) to the results we expect to achieve in the short, medium, and long term. It also describes the various stakeholders and their contributions to improving government operations. A copy of the results chain is included in Section III—Supplementary Information.

Our program activity

The Office has one program activity—legislative auditing. Legislative auditing consists of eight subactivities, two of which are supporting activities: professional practices and audit services. The Office’s time is largely devoted to the following four subactivities.

  • Performance audits and studies;
  • The audit of the summary financial statements of the Government of Canada;
  • Financial audits of Crown corporations, territorial governments, and other organizations; and
  • Special examinations of Crown corporations.

Table 3 of the financial tables included under Section III—Supplementary Information provides summary information on the Office’s financial and human resources allocated to each of our eight subactivities.

Our priorities

The Office has identified three strategic challenges that were taken into consideration when setting out the planning priorities for the coming year.

Integrating changes to professional standards. Among the keys to the Office’s success are the professionalism of our staff, the comprehensiveness of our methodology, and the rigour of our quality management systems. The Office will be facing profound challenges relating to these aspects of our practice, due to the recent decisions by standard setting boards of the Canadian Institute of Chartered Accountants to adopt International Standards on Auditing in 2010 and International Financial Reporting Standards (IFRS) in 2011. The scale of these changes will be unprecedented in auditing and accounting in Canada. Our Office will need to incorporate these upcoming changes in auditing standards into the way we conduct audits. Our Office must also develop an understanding of how these changes in accounting standards will affect the financial statements of the entities we audit. We will need to adjust our methodology to take these changes into account. We will also need to train our staff, and ensure that our audit tools continue to support us in doing our work efficiently. There will likely be a need to update our quality management system. It will be important for us to engage the entities that we audit, to ensure that they understand the implications of the adoption of IFRS. To respond to these challenges, the Office is developing a multi-year plan that will ensure we are well prepared to carry out our work in this new environment.

Sustaining our capacity. Throughout the Public Service of Canada, shifting demographics and an aging workforce will make recruiting and retaining employees ever more difficult. The loss of corporate memory due to retirements will place significant pressure on organizations to ensure that effective programs for knowledge transfer are in place. The Office of the Auditor General will not be spared these challenges, which will in fact be exacerbated, due to the expansion of our mandate, and because professional auditing skills are in increasingly high demand and short supply.

In September 2006, the Office developed a recruitment and retention strategy covering the period 2006–07 to 2008–09. The Office will dedicate resources to ensure that effective recruitment and retention plans are in place as a means of attracting and retaining qualified employees. In the coming year, we will focus on addressing compensation issues and increasing access to a variety of challenging opportunities for staff. We will continue to make the orientation and integration of new staff a priority for our Office. We will also focus on knowledge transfer by further integrating support from senior staff into the regular development of audit professionals and by renewing, rebuilding, and reinforcing specialist capacity.

Building constructive entity relations. We understand the critical importance of building and maintaining an effective relationship between our Office and the organizations that we audit. The Office regularly carries out surveys involving these organizations. The results are one of a number of different sources of information that help the Office analyze its performance and plan for any necessary correction or improvements. The questions asked in the surveys are also an attempt to understand the degree to which our work is seen to add value. See Exhibit 4 for the specific targets for our indicators of impact.

In the coming year, we will endeavour to strengthen our relationships with the organizations we audit. We will also strive to ensure that consistent practices are used throughout the audit process across all areas of our Office.

In addition to these three strategic challenges, there is a further concern that we will be working to address.

Preserving the independence of Officers of Parliament. When government central agencies issue management and other policies, they currently apply to Officers of Parliament in the same way that they apply to government departments and agencies. Certain provisions of these policies do not recognize the independence of Officers of Parliament and the management autonomy needed to protect our independence. In 2007–08, we, along with the other Officers of Parliament, provided the Treasury Board Secretariat with five “working principles” which we believe should guide the application of government policies to Officers of Parliament. These principles attempt to demonstrate respect for the objectives of the policies while addressing concerns regarding independence. We are planning to work with the government to resolve this matter.

Our plans

Serving Parliament. One of the most important factors determining whether or not the Office is successfully fulfilling its mission is the degree to which our reports, and our recommendations, are seen by Parliament and the government as offering objective assurance, information, and guidance for corrective action.

As part of our continuing effort to serve Parliament, our primary client, in the most effective manner, we plan to be proactive in continually seeking Parliament’s feedback on the products and services we provide. As a follow-up to our most recent survey of parliamentarians, undertaken in June of 2007, we will be developing an approach to obtaining regular feedback from parliamentarians, with a view to developing a more in-depth understanding of the perceived usefulness of our reports and appearances before parliamentary committees.

We also monitor the number of parliamentary hearings and briefings that we participate in and the percentage of performance audits reviewed by parliamentary committees. This tells us whether the parliamentary committees, as key users of our reports, are engaged in the audit process.

In 2007–08, the Office set up an independent panel, called the Green Ribbon Panel, to undertake a review of our environment and sustainable development practice. This practice’s mandate was defined by Parliament when it amended the Auditor General Act to create the position of Commissioner of the Environment and Sustainable Development in 1995. The Green Ribbon Panel looked for, and recommended, opportunities to strengthen implementation of this mandate in such a way as to best serve Parliament.

During the coming year, the Office will appoint a new Commissioner of the Environment and Sustainable Development and will address the recommendations of the Green Ribbon Panel.

Conducting audits. We plan to conduct the following audits in the coming year.

Performance audits. In 2008–09, we plan to report on the findings of 29 performance audits. Our performance audits are published up to four times a year in reports of the Auditor General of Canada and the Commissioner of the Environment and Sustainable Development. The schedule for the coming year is shown under Section III—Supplementary Information.

We consult with the organizations we audit as part of our planning process. This process is a risk-based approach to audit planning that involves the development of a multi-year audit plan for each significant federal government organization subject to audit. It involves discussions with key senior managers, as well as a review of key documentation, of the entities subject to audit. We plan to complete at least six of these multi-year plans in 2008–09.

Financial audits. The Office has statutory responsibilities for the audit of the summary financial statements of the Government of Canada, financial statements of the territorial governments, and financial statements of federal and territorial Crown corporations and other entities. This year we will conduct more than 130 financial audits, as well as other assurance engagements.

Special examinations. Over a period of five years, the Office performs special examinations of about 40 Crown corporations. In 2008–09 we plan to report the special examinations of the 14 corporations listed under Section III—Supplementary Information.

Implementing our Sustainable Development Strategy. In December 2006, the Office tabled its Sustainable Development Strategy for the period 2007–09. Our main contribution to sustainable development is the influence that our audit work and our recommendations for improvement have on the actions of federal departments, agencies, and Crown corporations. Our Strategy presents our plans, commitments, and targets to integrate environmental considerations into both our audit selection and planning decisions and our operational decision making. Some of our key commitments and targets are presented in Section III—Supplementary Information.

Operating effectively. Our operational objective is to deliver reports on time, on budget, and in accordance with our quality management framework. The Office has established measures and targets to help us monitor our performance in each of these areas. Recent results indicate that we have an opportunity to improve in both our on-time and our on-budget performance. See Exhibit 5 later in this section for our specific targets.

A senior committee of the Office oversees the budget-setting process and regularly monitors our operational results for performance audits. Setting targets for performance audits is difficult because each performance audit is unique, and because we have an obligation to investigate to a satisfactory conclusion any issues noted during the audit. We intend to look at how audit offices in other countries carry out their budget estimation process, with the goal of identifying any improvements that we may incorporate into our approach.

A senior committee oversees our operational results for financial audits and special examinations. The committee focuses on integrating changes to international professional standards into our financial audit work. To improve our on-budget performance, it has also initiated diagnostic reviews that will be completed in 2008.

We will work to ensure that the special examination quality management framework mirrors the more mature framework used for performance audits. This will involve, among other things, updating the existing examination methodology and setting a more rigorous risk-based approach to the planning and conduct of special examinations. We expect that this will also help improve our on-budget and on-time performance.

Providing a respectful workplace. Our specific values for creating a respectful workplace are trust, integrity, and leading by example. These values define how we conduct ourselves and carry out our work. In addition, the Office strongly supports the values of competency, representativeness, non-partisanship, fairness, employment equity, transparency, flexibility, affordability, and efficiency. The Office includes these values in all of its human resource activities. Since 2005, fifty percent of managers’ performance pay has been tied to their people management skills.

The Office is tracking its progress against a set of targets for creating a respectful workplace. See Exhibit 5 for the specifics of these targets. The Office will be conducting its bi-annual survey of employees in 2008.

Contributing to our profession. Within Canada, the Office works with the 10 provincial legislative auditors through the Canadian Council of Legislative Auditors (CCOLA) to

  • share information and experience on matters of mutual concern,
  • develop audit methodology and professional practices,
  • improve the quality and performance of legislative auditing in Canada, and
  • collaborate with provincial legislative audit offices on issues that cross jurisdictional lines.

Office staff are involved in many professional organizations in Canada. Currently, the Office is represented on two Canadian Institute of Chartered Accountants standard-setting boards, by

  • the Deputy Auditor General sitting on the Public Sector Accounting Board, which sets accounting standards for the Canadian public sector; and
  • one of our assistant auditors general sitting on the Auditing and Assurance Standards Board, which sets auditing and assurance standards and guidelines.

Contributing internationally. We will continue the implementation of our international strategy. This strategy ensures that the Office’s collaboration with international organizations, and its audits of international institutions, is aligned with the interests of Parliament and the Government of Canada.

The strategy has the following four goals for the 2008–09 planning period:

  • Increase our involvement in international standard setting and in the adoption of international standards.
  • Develop, with the Canadian International Development Agency (CIDA), an understanding of how we can best target our efforts to build capacity in other audit offices, consistent with the government’s international development priorities.
  • Re-focus our knowledge-sharing activities to provide maximum benefit to our auditors.
  • Work with the Department of Foreign Affairs and International Trade to promote better managed and more accountable international institutions, through our involvement in auditing international organizations.

Specifically, the Auditor General represents the International Organization of Supreme Audit Institutions (INTOSAI) on the International Federation of Accountants—International Public Sector Accounting Standards Board (IFAC–IPSASB).

The Office will continue to participate in the International Assistance Program for Improved Governance and Accountability of the CCAF–FCVI Inc. This program was established in 1980 to strengthen performance auditing in national audit offices. Funded by the Canadian International Development Agency, the program brings auditors from national audit offices to Canada for nine months of training in performance auditing, accountability, and governance.

In partnership with the Canadian International Development Agency and the Université du Québec en Outaouais, we will continue our involvement in helping to build capacity in audit institutions located in French sub-Saharan Africa.

Our audit mandate for the United Nations Educational, Scientific and Cultural Organization (UNESCO) ended in 2006–07, and our audit mandate for the International Civil Aviation Organization ends in 2007–08. We will become the auditor of the International Labour Organization (ILO) starting in 2008.

We actively participate in peer reviews of other supreme audit institutions. We have recently agreed to lead the peer reviews of the United States General Accountability Office (GAO) and of the European Court of Auditors. We participate as team members in the peer review of the New Zealand National Audit Office.

Our performance indicators, measures, and targets

The Office tracks a core set of indicators and measures to help guide management decision making through an understanding of the organization’s ongoing results.

Selected indicators help us gather information on the impact of our work. These indicators involve factors that are not entirely under the control of the Office. They help us to assess the extent to which

  • our work adds value for the key users of our reports,
  • our work adds value for the organizations we audit,
  • key users of our reports are engaged in the audit process, and
  • key users of our reports and the organizations that we have audited respond to our findings.

Through selected measures designed to evaluate organizational performance, we gather information on how efficiently and effectively the Office itself is functioning. The measures involve items for which the outcome is largely under the control of the Office. Our measures of organizational performance help us monitor the extent to which

  • our workis delivered on time and on budget,
  • our quality management framework is operating effectively, and
  • we provide a respectful workplace.

Exhibits 4 and 5 provide a summary of the indicators that we use to track impact, and the measures we use to track operational performance, including the targets for 2007–08 and 2008–09. In Exhibit 4 below, “on time” indicates that the work is done by the statutory deadline, where one exists (usually 90 days after fiscal year end) or, where no statutory deadline exists, by 150 days after the year end. “On budget” means that the actual audit hours to complete an audit did not exceed the originally budgeted hours by more than 15 percent.


Exhibit 4—Summary of our indicators of impact and targets

Objectives and indicators

2006–07 Actual

2007–08 Target

2008–09 Target

Our work adds value for the key users of our reports

 

 

 

Percentage of parliamentary committee members who find our performance audits add value

92

75

90

Percentage of audit committee chairs who find our financial audits add value

75

75

75

Percentage of board chairs who find our special examinations add value

87

75

90

Our work adds value for the organizations we audit

 

 

 

Percentage of departmental senior managers who find our performance audits add value

61

65

65

Percentage of Crown corporation and large department senior managers who find our financial audits add value

66

75

75

Percentage of Crown corporation chief executive officers who find our special examinations add value

78

75

75

Key users of our reports and the organizations we audit respond to our findings

 

 

 

Percentage of performance audit recommendations fully implemented four years after their publication

46

50

50

Percentage of performance audit recommendations substantially implemented four years after their publication

26

No target established

25

Percentage of qualifications that are addressed from one financial audit to the next

100

100

100

Percentage of significant deficiencies that are addressed from one special examination to the next

100

100

100

Key users of our reports are engaged in the audit process

 

 

 

Number of parliamentary hearings and briefings we participate in

64

No target established

40

Percentage of performance audits reviewed by parliamentary committees

63

60

60


 


Exhibit 5—Summary of our measures of operational performance and targets

Objectives and measures 2006–07 Actual 2007–08 Target 2008–09 Target
Our work is delivered on time and on budget

 

 

 

On time:

 

 

 

Percentage of performance audit reports tabled in the House of Commons on the planned tabling date as published in the Report on Plans and Priorities

91

100

100

Percentage of financial audits completed on time

 

 

 

  • federal organizations—Crown corporations

100

100

100

  • federal organizations—with a statutory deadline

91

100

100

  • federal organizations—without a statutory deadline

52

100

70

  • territorial organizations

53

100

551

Percentage of special examination reports delivered on or before the statutory deadline

25

100

100

On budget:

 

 

 

Percentage of audits that meet their budgeted hours

 

 

 

  • Performance audits

59

70

70

  • Financial audits—Crown corporations

44

70

70

  • Financial audits—federal organizations with a statutory deadline

50

70

70

  • Financial audits—federal organizations without a statutory deadline

88

70

70

  • Financial audits—territorial organizations

54

70

55

  • Special examinations

0

70

70

Our quality management framework (QMF) is operating effectively

 

 

 

Percentage of external peer reviews that find our QMF suitably designed and operating effectively

n/a

100

No review in 2008–09

Percentage of internal practice reviews that find our audits to be in compliance with our quality management frameworks

100

100

100

We provide a respectful workplace

 

 

 

Percentage of employees who believe the Office is either an above-average place to work or one of the best places to work

82

No survey in 2007–08

80

Percentage of management who meet our language requirements

 

 

 

  • assistant auditors general and principals

822

100

100

  • directors in bilingual regions

592

75

75

Percentage representation of workforce availability for

 

 

 

  • women

113

100

100

  • people with disabilities

105

100

100

  • Aboriginal peoples

110

100

100

  • members of visible minorities

65

100

100

Percentage of retention of audit professionals

86

90

90

1While 65 percent of these audits have statutory due dates, past experience indicates that it is currently not practical to meet these deadlines.

2The calculation of these results no longer includes new non-bilingual appointees for the first two years following their appointment.


The employee survey results shown in the table were published in June 2006. The next survey will be conducted in the spring of 2008. The peer review carried out in 2003 found that our quality management framework is suitably designed and operating effectively. No peer reviews were carried out in 2006–07. Planning is under way to conduct an office-wide peer review in 2009. The peer review report is expected in 2010.

Our funding

In December 2006, the Parliamentary Panel on the Funding and Oversight of Officers of Parliament recommended, and the Treasury Board approved, the Office’s request for a $2 million one-time investment in a new records management system and a new financial system, plus a $4 million increase in ongoing funding for 2007–08 and future years. Both technology projects are under way, with expected implementation of the financial system in April 2008, and with implementation of the records management system beginning in May 2008. The ongoing funding is largely for new audit work resulting from changes to the Financial Administration Act that made an additional seven Crown corporations subject to the special examination requirements under Part X of that act, and gave us financial audit responsibilities for three additional Crown corporations. To date, we have completed the first annual audits of these new entities. Part of this ongoing funding is to expand our recruitment and methodology development efforts, both of which are now under way.

For 2008–09, we have identified a need for additional funding of just over $1 million. This new funding will be applied toward the cost of the audit of the International Labour Organization, toward the change in status from joint auditor to sole auditor of Via Rail, and toward a technical adjustment related to employee benefit costs.

We are facing other possible future funding needs related to our outdated Human Resources Management System. In the longer term, there may be additional costs associated with the audit of department financial statements, once the government has determined the timing of their delivery. There is also a need for the Commissioner of the Environment and Sustainable Development to submit a progress report under the Kyoto Protocol Implementation Act that received Royal Assent in 2007.

Overall, the Office is confident that it has the funding required to serve Parliament. Further details on the Office’s planned spending can be found under Section III—Financial Tables.