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Audit of the AgriMarketing program – assurance systems stream

November 30, 2016

Executive summary

The AgriMarketing Program is a five-year, $341 million program comprised of a combination of government initiatives and contribution funding for industry-led projects. The AgriMarketing Program supports the agricultural sector by creating and maintaining access to markets and taking advantage of market opportunities.

Assurance Systems is one of four streams within the AgriMarketing program. This stream helps enhance the competitiveness of the agriculture industry by meeting buyer and market demands for assurance. It provides funding to projects that will lead to processes and procedures that increase consumers' and buyers' confidence that industry is addressing food supply chain risks and that will increase the industry's ability to prove assurance claims.

When this stream was initiated, it was allocated $105.5 million over the five-year period 2013-18. Of this amount, $34.1 million was budgeted for operational funding and $71.4 million was allocated to contributions.

The Audit of the AgriMarketing Program – Assurance System Stream was included in the 2016-2019 Risk-Based Audit Plan. The objective of the audit was to provide assurance on the adequacy and effectiveness of the management control framework in place to support the delivery of the program.

The audit concluded that an adequate and effective management control framework is in place to support the delivery of the AgriMarketing program – Assurance Systems stream.

In particular, the following strong practices were noted:

The following opportunities were identified to improve the management control framework:

1.0 Introduction

1.1 Background on the Agrimarketing Program - Assurance Systems Stream

Figure 1: Distribution of funding by program component
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Total Funding Allocation for Approved Projects

  • Food safety systems spent $1,599,225;
  • Surveillance systems spent $2,328,554;
  • Market attribute/Quality standards spent $12,981,998;
  • Traceability systems spent $11,273,281;
  • Total amount spent was $28,183,058.

1.2 Organization and governance

1.3 Audit objective

1.4 Audit scope

1.5 Audit approach

Figure 2: Sample of projects per program component
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Food safety systems had seven approved projects of which two samples projects were selected; Surveillance systems had four approved projects of which one was selected; Market attribute/Quality standards had eighteen approved projects of which five were selected; Traceability systems had six approved projects of which two were selected.

1.6 Conclusion

1.7 Statement of conformance

2.0 Detailed observations, recommendations and management responses

The following sections present the key observations, based on the evidence and analysis associated with the audit, and provides recommendations for improvement. Management responses were provided and include:

The results of the audit are organized into three sections: Program Oversight, Eligibility Assessment, and Agreement Monitoring and Reporting.

2.1 Program oversight

Recommendation 1 – Program level reporting
The Assistant Deputy Minister (ADM) of Programs Branch should review and strengthen the systems in place to support program level reporting, in particular:

  1. Quantitative program information should be incorporated into program-level risk assessments to help inform the identification of issues and decision-making; including action plans to mitigate identified risks, as appropriate.
  2. Aggregate project reports should be developed to support decision-making.

Management Response and Action Plan:  Agreed. Programs Branch acknowledges the benefits of robust processes and systems that provide aggregate quantitative information to support program and project decision-making system project information as a basis for decision-making.

  1. The Assurance Systems Stream will review existing program-level risk assessment processes against Service and Program Excellence Directorate's Program Risk Management  Control Framework for Non-BRM programs requirements and make the necessary adjustments to ensure quantitative program information is incorporated into program-level risk assessments where information is available and where appropriate.
  2. The Assurance Systems Stream, in consultation with the Directorate's Program Design and Performance Division and other Branch Directorates, will define business requirements for a more robust process and electronic/computer-based system for collecting, monitoring and reporting individual and aggregate assurance projects. A process and electronic/computer-based system will be implemented once the business requirements are approved and adopted by the Branch. 

Lead Responsible:  ADM, Programs Branch

Target Date for Completion: Part a) June 2017 Part b) December 2017

2.2 Eligibility assessment

Recommendation 2 – Documentation of eligibility assessments
The Assistant Deputy Minister of Programs Branch should review documentation requirements for the eligibility assessment of applications to strengthen the decision-making process.

Management response and action plan: Agreed. Programs Branch recognizes the importance of documenting decision-making related to project applications and assessments.

Programs Branch will undertake a review of documentation requirements and identify and implement improvements that would help to strengthen the assessment and decision-making process.

Lead responsible: ADM, Programs Branch

Target date for completion: June 2017

Recommendation 3 – Terms of reference for DG Review Committee
The Assistant Deputy Minister of Programs Branch should review the Director General Project Review Committee's Terms of Reference to ensure that information and quorum requirements are appropriate for program needs.

Management response and action plan: Agreed. The Assurance Systems Stream will review the Terms of Reference and propose modifications to the DG Review Committee to ensure that information and quorum requirements are appropriate for program needs; and, that they are clearly documented.

Lead Responsible: ADM, Programs Branch

Target Date for Completion: January 2017

2.3 Agreement monitoring and reporting

Recommendation 4 – Recipient / project monitoring and performance assessment
The Assistant Deputy Minister of Programs Branch should review documentation requirements for the project risk assessment, program monitoring activities and the assessment of the recipient / project performance to strengthen agreement monitoring and reporting.

Management response and action plan: Agreed. The Assurance Systems Stream, in consultation with the Directorate's Program Design and Reporting Division, will conduct a business process review of existing tools and processes related to project risk assessment, program monitoring activities and the assessment of recipient project performance against AAFC's Recipient / Project Risk Management Framework (RPRMF). The findings of this review will form the basis for recommendations and actions to strengthen agreement monitoring and reporting.

In the interim, Assurance Systems Stream will formally communicate the expectations to program officers for documenting project risk assessments, program monitoring activities, and the assessment of recipient / project performance.

Lead(s) responsible: ADM, Programs Branch

Target date for completion: June 2017

Annex A:   Audit Criteria

  1. Program management receive sufficient and timely recipient information for decision making.
    • Performance processes are in place to communicate recipient performance information to key decision makers.
    • Summarized information on the results / progress of recipient projects are provided to management in a timely, accurate, complete and useful manner.
    • A formal risk management process is implemented within the program.
    • Service standards are communicated to program management on a regular basis.
  2. Recipient eligibility is assessed and appropriately documented
    • Recipients are assessed for eligibility using established criteria which are based on the program’s Terms and Conditions.
    • Controls are in place to support fair, transparent and free of bias decisions.
  3. Recipients comply with the Terms and Conditions of the Program.
    • Funding agreements are aligned with recipient and initiative risk.
    • Recipient compliance to the program Terms and Conditions and the funding agreement is monitored and issues are addressed when indicated.
    • Payments made to recipients accurately reflect funding agreements.

Annex B:   Acronyms

AAFC
Agriculture and Agri-Food Canada
ADM
Assistant Deputy Minister
CFIA
Canadian Food Inspection Agency
DG
Director General
PPMRMS
Program Performance Measurement and Risk Management Strategy
RPRMF
Recipient/Project Risk Management Framework
SPED
Service and Program Excellence Directorate
TB
Treasury Board
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