Background 8.1 We have a strategic goal that departments and agencies accept and implement our recommendations. Consequently, we track both the number of recommendations accepted and the number of recommendations implemented. This chapter reports on those two key performance indicators. 8.2 This goal and these indicators help us fulfill our mission. In its simplest terms that mission is “We promote accountability.” And these two performance indicators help us promote accountability by showing where our work influenced positive change in government; change towards greater economy, efficiency and effectiveness. 8.3 This chapter also promotes accountability in that MLAs and the general public can gain some appreciation for how responsive departments and agencies have been to our recommendations. One aspect of accountability is acting appropriately with information brought to your attention. When we report recommendations publicly under Section 13 of the Auditor General Act, it is a serious matter. The Report of the Auditor General includes “anything he considers to be of significance and of a nature that should be brought to the attention of the Legislative Assembly.” We think it is important that MLAs and the public see if departments and agencies are making progress with those recommendations that were significant enough to have been brought to the attention of the Legislative Assembly in previous years. Scope 8.4 Our practice is to track the status of our recommendations for four years after they first appear in the Report of the Auditor General. If a department or agency disagreed with the recommendation, we do not usually follow up on it. A department or agency would be very unlikely to adopt a recommendation it had previously disagreed with. The one thing that might change that is if the recommendation became the subject of enquiry by the Public Accounts Committee or the Crown Corporations Committee, or in the Legislative Assembly. This extra scrutiny by the Members could cause a department or agency to reconsider its response. Alternatively, a body such as the Public Accounts Committee could adopt one of these disagreed recommendations as one of their own and repeat it in its report to the full Legislative Assembly. 8.5 We do not normally prepare an update after the first year; we wish to provide the departments and agencies ample opportunity to take action. After years two, three and four we prepare a status report, which shows departments’ and agencies’ progress (or lack thereof) in implementing our recommendations. In other words, in this Report for 2005, we are tracking progress on recommendations from 2001, 2002, and 2003. Our plan is to begin follow up on recommendations from 2004 in next year’s Report. 8.6 To prepare this chapter, we request written updates on progress from the respective departments and agencies. We review these updates by meeting with appropriate officials. In some cases we request additional documentation to test the accuracy of the updates we have been given. In other words, if a department says it has implemented a recommendation, we do some checking to see if this is the case. 8.7 This follow-up work is normally performed at what professional accountants refer to as “review level” assurance. Rather than carry out a full audit on these updates, we carry out enough procedures to allow us to conclude the information is plausible in the circumstances. Whereas an audit provides high (but not absolute) assurance, this review level assurance is more accurately referred to as “moderate”. 8.8 Exhibit 8.1 gives a quick overview of the status of recommendations by department and agency. We devote most of the space in this chapter to the status of recommendations from 2001. This is because these recommendations have reached the end of the four year follow-up cycle. We believe it is important from an accountability point of view for the Members of the Legislative Assembly and the general public to have one last look at these recommendations which have not been adopted. 8.9 For the most part, we have not given any comment on our 2002 and 2003 audits, other than that provided by Exhibit 8.1. (The exhibit refers to our prior Reports in the “Year” column to enable the reader to find the original recommendations either online or through a hard copy of the Report.) In certain cases, though, where we believe a recommendation from 2002 or 2003 requires more attention Exhibit 8.1 Status of recommendations made by our Office from a department or agency than it has received, we have provided some additional commentary. We have also reported on recommendations from 2002 and 2003 that were originally agreed to but that are now, either tacitly or directly, disagreed with by the department or agency concerned. 8.10 We had one limitation in our scope this year: • With respect to our 2002 audit of cellular phones, the Department of Supply and Services did not provide us with access to the tender submissions for various services. Therefore we were unable to perform our full range of review procedures on their written update. The chief limitation imposed was that we were unable to see the supporting documentation for a yet to be awarded 30 April 2004 tender for communications services. Because of this we are unable to determine the lost savings. Results in brief 8.11 Exhibit 8.1 shows that departments and agencies accepted 421 of the 484 recommendations we made in 2001, 2002 and 2003. Departments and agencies had implemented 260 of these by the time we drafted our 2005 Report. We rated another 84 as partially implemented. 8.12 Forty-nine recommendations from 2001 have not been fully implemented. Given our practice of following up on recommendations for four years, we do not intend to follow up on these recommendations in 2006. 8.13 The Department of Supply and Services has still not awarded tenders for cellular phone airtime usage charges and long distance charges. This is despite the fact that the Department responded to our 2002 audit on cellular phones with the statement that “The Department will be tendering for cellular air time and cellular long distance rates by the spring of 2003.” The Province has ignored potentially significant cost savings by not awarding this tender. This is a lack of due regard for economy. It also contravenes the Public Purchasing Act. Comments on recommendations from 2001 8.14 Departments and agencies have not fully implemented forty-nine of our recommendations from our 2001 Report. Exhibit 8.2 shows all forty-nine recommendations and their current status. The term “partial” in the final column means we have judged the recommendation as partially implemented. The term “accepted” means we have determined the department or agency has not made progress with the recommendation, but neither have they disagreed with it in their responses of the last four years. Exhibit 8.2 Recommendations made in 2001 that were not fully implemented Exhibit 8.2 Recommendations made in 2001 that were not fully implemented - continued 8.15 These recommendations have reached the end of the four year follow-up cycle. We believe it is important from an accountability point of view for the Members of the Legislative Assembly and the general public to have one last look at these recommendations which have not been fully implemented. Perhaps the Members could reflect upon them when making their enquiries during meetings of the Public Accounts Committee and the Crown Corporations Committee. 8.16 In the following paragraphs, we also repeat those recommendations from 2001 we consider to be of significance and of a nature that should be brought to the attention of the Legislative Assembly once again. The recommendations are from 2001 audits in: • Department of Education - Pupil transportation; • Department of Family and Community Services (FCS) and Department of Health and Wellness (DHW) – Prescription Drug Program; • Department of Natural Resources – Crown lands management; • Department of Public Safety – High risk drivers; • Department of Supply and Services – Provincial Archives; and • Department of Supply and Services - Public Purchasing Act. 8.17 We provide responses the departments and agencies made with respect to those recommendations. Where applicable, we have added our own comments. Department of Education Pupil Transportation 8.18 This audit had over seventy recommendations. The Department has been thorough in implementing the recommendations and most have either been implemented or partially implemented. We have commended the Department’s swift implementation in a prior Report. 8.19 We do wish to note four recommendations that have not been implemented though. These four addressed various issues around student council vehicles. Because of the potential impact on safety, we believe we should repeat those recommendations in an attempt to ensure they are dealt with. In recommendations 3.307 through 3.310 of our 2001 Report we recommended that the Department: • establish responsibility for student council owned vehicles; • ensure drivers of student council owned vehicles are following the guidelines provided by the Department; • monitor the number, type, age, and condition of student council owned vehicles to ensure the safety of this mode of transportation; and • consider an appropriate form of driver training for drivers of student council owned vehicles. 8.20 The Department’s initial response to the four recommendations was: In February 2000, the Department published a series of guidelines for the use of student council vehicles. The guidelines were the results of discussions with two ad-hoc committees (English and French) composed of school principals, school districts student services coordinators, physical education teachers and department staff. Copies of the guidelines were provided to all middle and high schools across the Province. Following the publication of those guidelines and feedback the Department is now developing a formal policy of these issues. This policy will be finalized during the 2001-2002 school year and will establish minimum training for the drivers of those vehicles and set safety standards. 8.21 In 2003 the Department added that “the Pupil Transportation Branch issued guidelines on the use of Student Council Vehicles and other vehicles for school related activities in February 2000”. In 2004 the Department advised us “Two policies were drafted: Policy 512 (Student Council Vehicles) and Policy 513 (Transportation to and from Off-Site School-Related Activities).” Further, the Department noted it was “waiting for legal advice prior to making them official. For the time being, school districts are making use of the guidelines that were issued in 1999.” 8.22 This year a similar statement said “in 1999, guidelines were distributed to all school districts. A draft policy has been developed. The department is waiting for legal advice prior to final review with school districts.” Department of Family and Community Services (FCS) and Department of Health and Wellness (DHW) Prescription Drug Program 8.23 This audit originally had 17 recommendations. At the time of preparing this chapter, five of the recommendations appear in Exhibit 8.2. 8.24 During the past year, the departments formed a joint committee for the purpose of addressing the issues raised in the audit. The joint committee has successfully implemented four recommendations in the past few months. Two recommendations still not fully implemented are shown below. We repeat those recommendations along with charts showing the departments’ responses for four years. In our opinion, these responses provide an excellent example of how time can continue to elapse when two departments must work together to resolve an issue. • (5.111) - We recommended that the two departments work together and determine their information needs, including whether or not the PDP Division should have access to NBCase. Formal communication channels between the two departments should be established. Exhibit 8.3 • (5.126) - We recommended that the two departments work together and develop a proper monitoring system for the plan that satisfies both departments’ needs. Exhibit 8.4 Department of Natural Resources – Crown lands management 8.25 The recommendations that remain to be implemented relate to performance reporting. We recommended that • (6.59) - the Department establish measurable goals and objectives that adequately address the Minister’s four responsibilities as assigned under subsection 3(1) of the Crown Lands and Forests Act. These should be disclosed in the Department’s key public documents. • (6.79) - departmental goals and objectives be linked to the spending estimates and they be disclosed at an appropriate level to the MLAs and the general public. • (6.97) - as part of establishing objectives related to its responsibilities under the Act, the Department develop suitable performance measures and that it report on them on an appropriate basis. • (6.104) - the performance measures in the “Summary of Performance of Crown Timber Licensees” be linked to the Minister’s four responsibilities for Crown lands. • (6.117) - the Annual Report of the Department provide actual and budget financial information in summary form and a narrative explaining major variances for all major types of revenue and expenditures. • (6.122) - the Department report other aspects of financial performance related to Crown land. This could include a statement clearly showing all the revenues and expenditures it incurs in the “business” of harvesting of Crown wood. 8.26 In October, 2005 the Department responded to our April 2005 request for an update as follows: The Department has considered setting measurable goals and objectives to align with each of the Minister’s responsibilities of (1) development, (2) utilization, (3) protection and (4) integrated management of the resources of Crown land as set out in section 3(1) of the Crown Lands and Forests Act. The Department has concluded that attempts to isolate each of these four responsibilities for goal setting purposes were fraught with difficulty because many of the department’s activities cannot be easily placed in one of these four categories. (For example is plantation herbiciding a “protection” or “development” responsibility?) The Department believes that reporting on such activities as silviculture in the fashion it did in the 2003-04 Annual Report is the best way to display what it accomplished with the public funds provided by the Legislature. The Department recognizes that it can improve the financial information it provides about revenue by linking it more closely to specific program activity and will undertake to do so beginning with the 2005-06 Annual Report. In 2005-06 the Minister of Natural Resources will be releasing the department’s first ever “State of the Forest” report. This document, together with the web links that will be provided, will greatly enhance the information about Crown Land Forest Management made available to the public. Department of Public Safety High risk drivers 8.27 For two of the six recommendations not fully implemented, the Department responded to our 2005 update letter by informing us that the recommendations had been implemented. Our field work this summer, however, indicated that this was not the case. In 2001 we recommended the Department • (7.74) - adopt criteria to assist the Registrar in a more proactive application of section 95(3). • (7.84) - develop ways to ensure notices of suspension are delivered in a timely fashion to high-risk drivers. 8.28 We encourage the Department to revisit these two recommendations. Department of Supply and Services – Separate audits of the Provincial Archives and the Public Purchasing Act 8.29 We made 42 recommendations on these two audits combined. Sixteen of these are still outstanding although some work has been done on at least six of these. 8.30 During the four years since we carried out the audits, the Department has raised a lack of resources as a reason for not being able to deal with some of the matters, particularly reviewing and enforcing the Public Purchasing Act. Comments on recommendations from 2002 and 2003 Department of Supply and Services – 2002 audit of cellular phones 8.31 During this audit we recommended the Department comply with the Public Purchasing Act and tender airtime and long distance usage for cell phones. 8.32 At the time of the audit in 2002 the Department responded: The Department will be tendering for cellular air time and cellular long distance rates by the spring of 2003, in conjunction with the new cellular hardware contract. This is consistent with the telecom procurement policy approved by the Board of Management at the request of the Department of Supply and Services. 8.33 Two years later, in 2004, the Department stated “RFP's have been issued for cellular service plans and long distance which will result in five year service contracts”. When we reviewed the issue this year the Department responded that it “has released a series of tenders for these services”. 8.34 Despite its commitment in 2002, the Department of Supply and Services has still not awarded tenders for cellular phone airtime usage charges and long distance charges. By failing to award these tenders on a timely basis, we estimate the Province has paid hundreds of thousands of dollars in unnecessary cellular airtime and long distance charges. This is a lack of due regard for economy. And, as importantly, this also contravenes the Public Purchasing Act. Department of Transportation – 2002 audit of Vehicle Management Agency 8.35 During this audit we recommended that the Agency revisit the Balanced Scorecard to ensure it includes established industry benchmarks for its performance indicators. 8.36 In its original response from 2002, the Department said “VMA agrees to review information on industry standards and will consider the feasibility of using this information in various aspects of measuring performance.” Last year the Department added “VMA is in the process of fine tuning and reviewing the Balanced Scorecard. The recommendation will be considered during the review.” 8.37 In 2005, however, the Department informed us “Because of the diversity of the vehicle fleet (e.g. type of vehicle, make model, age and nature of use) being repaired at its shops, VMA is currently using internal benchmarks to compare results from similar size Agency shops rather than comparing to industry benchmarks.” 8.38 Based on this response, we concluded the Department has decided not to include industry standards in its balanced scorecard. Thus, we will not be carrying this recommendation forward to future years. 8.39 We do believe, though, that there is value in rereading our original reasoning for recommending that the Agency use external benchmarks. Paragraph 9.118 of our 2002 Report says: One general comment we can make by looking at the performance measures in the Balanced Scorecard is that they are limited to comparing performance of individual shops to the Agency average. Certainly this does offer a valuable perspective. It is important to have good historical data on your own performance. And it is a worthwhile exercise to see how components of the organization have compared to the organization as a whole. But there are some limitations to using only internal comparisons. By comparing the Agency’s performance to established fleet benchmarks, the Agency would be in a better position to assess performance and to determine where corrective action may be necessary. It would have more objective evidence of whether it was doing a good job. 8.40 Further, the Auditor General’s Introductory Comments in that 2002 Report noted “In situations where government is providing services that can also be provided by the private sector it is extremely important to regularly evaluate whether or not a change should be made. This is the only way to ensure taxpayers are receiving value for money.” Department of Health and Wellness – 2003 audit of accountability of psychiatric hospitals and psychiatric units 8.41 During this audit we recommended that each psychiatric services agreement be signed by both the Division and the RHA to ensure mutual agreement and understanding of expectations. In this year’s update the Department responded: The Department has not instituted the practice of having the psychiatric services agreement signed by both the Division and the RHA to ensure mutual agreement and understanding of expectations. The delivery of Services is outlined in the Appendix of the Provincial Health Plan. Budget and standards that must be followed are in a letter signed by the Minister to the RHA Chairman. The Department believes that the appropriate vehicle for reaching such agreement and understanding is the Collaborative Leadership Forum. 8.42 We concluded the Department will not adopt the recommendation. Department of Supply and Services – 2003 audit of management of insurable risks to public works buildings 8.43 During this audit we recommended that the Department of Supply and Services establish value for each building it is responsible for and update these values on SBGS on a regular basis. This year the Department replied “At this time we do not see any merit in establishing a value for each building in our inventory. This would be low on our priority list.” In other words, the Department disagrees with the recommendation. Office of Human Resources (OHR) - 2003 audit of management of absenteeism 8.44 During this audit we recommended that the Office of Human Resources develop systems that enable supervisors to review reports that would clearly show the development of absences patterns, and ensure that short but frequent absences are appropriately scrutinized and reviewed by management. 8.45 We also recommended an additional systems enhancement: OHR should develop a formalized trigger regarding the number of days absent that would force a review by management and/or Human Resource personnel. Example: If an employee is absent x number of days, a meeting would take place between employee and employer to discuss the situation and possible return to work. 8.46 The Office of Human Resources wisely chose to carry out a cost benefit analysis prior to making the enhancements. It replied to us this year that “an assessment of the merits of enhanced reporting was completed by OHR and it was determined that enhanced reporting was not warranted at this time as it was not cost-beneficial”. 8.47 Based on this response, we do not intend to track these two recommendations further.