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Audit of Memoranda of Understanding and Service Agreements

Departmental Audit Committee
May 15, 2018

Abbreviations

AAFC
Agriculture and Agri-Food Canada
ADM
Assistant Deputy Minister
CMB
Corporate Management Branch
ISB
Information Systems Branch
MoU
Memorandum of Understanding
MISB
Market and Industry Branch
OCG
Office of the Comptroller General
OIPC
Office of Intellectual Property and Commercialization
PAB
Public Affairs Branch
PB
Programs Branch
SPB
Strategic Policy Branch
STB
Science and Technology Branch
TB
Treasury Board
TBS
Treasury Board Secretariat

Executive summary

Departments frequently use collaborations, partnerships, and other agreements with different levels of government, the private sector, non-governmental organizations, foreign governments and entities to deliver public programs and achieve public objectives.

Memoranda of Understanding (MoUs) and Service Agreements are designed to share the risks, costs, and benefits of particular initiatives, and should support overall departmental objectives, and priorities. Agreements are typically formalized in writing, which can enhance governance, accountability, and service quality by clearly defining roles, responsibilities, processes, and performance expectations. Various agreement mechanisms are used in the federal government including Grants and Contributions, MoUs, and Service Agreements. While agreements offer benefits in terms of economies of scale and efficiency, they also create unique risks related to the parties involved and the complexity of their topics, subjects, and substance.

The Audit of MoUs and Service Agreements was included in the 2017-21 Agriculture and Agri-Food Canada (AAFC) Integrated Audit and Evaluation Plan. The objective of the audit was to provide reasonable assurance that an adequate management control framework is in place for managing MoUs and Service Agreements.

The audit concluded that an adequate management control framework is not in place for managing MoUs and Service Agreements at the departmental level.

The audit made recommendations to establish a departmental management control framework for managing MoUs and Service Agreements. These include:

1.0 Introduction

1.1 Background

1.2 Audit objective

1.3 Audit scope

1.4 Audit approach

1.5 Conclusion

1.6 Statement of conformance

2.0 Observations, recommendations and management responses

This section presents the key observations based on interviews, evidence obtained, and analysis associated with the audit, and provides recommendations for improvement. Management action plans were provided and include:

The results of the audit are organized into two themes:

2.1 Governance

2.2 Control processes

Recommendation 1

The Assistant Deputy Minister (ADM), Strategic Policy Branch should lead a department-wide initiative in establishing a policy, guidelines, and templates to assist in the development and management of AAFC MoUs and Service Agreements.

Management response and action plan:
Agreed. The ADM, Strategic Policy Branch in collaboration with other branches will develop an AAFC policy, guidance, and related templates to provide clarification on the process for MoUs and Service Agreements development and management.

These will be posted and communicated on AAFC’s internal network.

Lead responsible:
Director General, Research and Analysis Directorate, Strategic Policy Branch with the support from other departmental branches.

Target date for completion: December 2018

Recommendation 2

The ADM, Information Systems Branch should lead in a department-wide initiative in developing a repository for MoUs and Service Agreements.

Management response and action plan:
The ADM, Information Systems Branch should lead in a department-wide initiative in developing a repository for MoUs and Service Agreements.

The development of the repository will begin once the guidelines from Recommendation 1 are finalized.

The repository will be housed on departmental networks and made available to all branches. The maintenance and update of information stored in this repository will be the responsibility of each branch and the delegated authority for which the MoU or Service Agreement applies.

Lead responsible:
Director General, Application and Knowledge Services, Information Systems Branch

Target date for completion: May 2019

Annex A: Definitions

As per the Treasury Board Secretariat (TBS) Guideline on Service Agreements, the definitions for MoUs and Service Agreements are as follows:

  1. Memorandum of Understanding

    A Memorandum of Understanding defines the broad parameters of a service relationship between the parties to the agreement, the service vision, and the exercise of decision-making authorities.

  2. Service Agreement

    A service agreement is a formal agreement between two or more parties (for example, between departments, between a department and a common or shared service provider, or between various levels of government) that articulates the terms and conditions of a particular service relationship.

Annex B: Audit criteria

  1. Line of Enquiry 1: Governance

    An oversight function has been established for MoUs and Service Agreements.

  2. Line of Enquiry 2: Control Processes

    Guidance, management, and coordination activities are in place.

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