Overview

1.1	In this volume of our 2007 Report, we are reporting on four 
projects: our audit of the New Brunswick Credit Union Deposit 
Insurance Corporation (NBCUDIC); our audit of the Private 
Occupational Training Act (POTA); our audit of the Wildlife Trust 
Fund; and our audit of program evaluation in the Department of 
Health. We have also included in this volume our follow-up work on 
some of the recommendations we made in prior years, and a chapter 
on the operations of the Office of the Auditor General.

1.2	In this first chapter, we provide a summary that is intended to 
give the reader an overview of the key information contained in each 
chapter. 

Risks that need to be 
managed

1.3	After reviewing the work contained in this volume, it is 
possible to identify a number of risks that the Province is facing but 
not fully managing. These include:

•	Lack of crisis planning. It is clear from our audits of both 
NBCUDIC and POTA that the Province needs to have in place 
plans that would allow for quick and orderly resolution to 
situations that might occur that would be beyond the financial 
capacity of the organizations to handle.

•	Overstated mandates. We found in our audit of POTA, as we 
found in our 2006 audit of the Pension Benefits Act, that the 
mandate described for some programs in annual reports and 
government communications is not always consistent with 
legislation. Government shouldn’t be in the business of 
overselling its programs.

•	Program relevance. We have found in recent audits that we end 
up recommending that government review its reasons for having 
a certain program. We asked this about the Health Levy last year, 
and this year we are recommending that the Province either give 
NBCUDIC the authority, independence and resources it needs to 
fulfill its mandate, or consider dissolving it.

•	Resource shortages. NBCUDIC does not have the resources it 
needs to do its job. The Department of Supply and Services 
continues to identify priority maintenance needs significantly 
higher than the funding provided for capital maintenance.

New Brunswick 
Credit Union Deposit 
Insurance 
Corporation

1.4	In chapter 2 of this volume, we report on our audit of the New 
Brunswick Credit Union Deposit Insurance Corporation. The Credit 
Unions Act puts the ultimate responsibility for insuring deposits held 
by credit unions on NBCUDIC. We found that the Province has not 
given NBCUDIC adequate authority, independence or resources to be 
able to provide that final level of protection, and so it should either be 
wound up or given the tools it needs to meet its responsibilities.

1.5	In my opinion, NBCUDIC can not adequately insure deposits. 
The responsibility that has been given to NBCUDIC in legislation is 
in actual fact a responsibility of the Province and, as we have seen 
with the recent events at la Caisse populaire de Shippagan, there are 
no standard procedures for accessing protection funds for the 
ultimate guarantee.

1.6	NBCUDIC is the third line of defence in the regime for 
providing 100% protection of eligible deposits in credit unions. The 
first line of defence is the equity of the individual credit unions, 
which must be maintained at a prescribed level. The second line of 
defence is provided by stabilization funds maintained by two 
stabilization boards. NBCUDIC is the third line of defence to protect 
approximately $2.7 billion in deposits. To do this it has $2.8 million 
in reserve. We also found that NBCUDIC:

•	does not have access to all sources of relevant information that 
would allow it to minimize its exposure to loss;

•	cannot take direct action to prevent or avoid a situation that 
would affect the safety of deposits;

•	board composition means that board members may have a 
conflict of interest;

•	has no control over the filling of positions or setting of priorities 
of the staff of the Office of the Superintendent of Credit Unions;

•	uses a method to assess levies for the purpose of building up a 
deposit insurance fund that does not take into account all relevant 
risk factors; and

•	does not have a regular operational method to access funds in the 
event that its deposit insurance fund is inadequate.

1.7	We concluded that the deposit insurance guarantee is actually 
provided by the Province, not NBCUDIC, and it is therefore hard to 
understand what purpose NBCUDIC is serving.

1.8	Furthermore, we observed some past events that raise some 
questions that need to be explored. For example, in 2002, the 
Superintendent of Credit Unions gave approval to members of la 
Fédération des caisses populaires acadiennes to establish a 1.5% 
general allowance for credit risk. This requirement was not extended 
to other credit unions even though the Superintendent at the time 
stated that recording a general provision “…ensures a healthy and 
prudent management of the credit risk. Our department is confident 
that this procedure is essential…” Also, the Caisse populaire de 
Shippagan went more than three years between annual general 
meetings. The position of the Superintendent of Credit Unions was 
not filled for a four year period, during which the responsibilities 
were added on to another employee of the Department of Justice. 

1.9	The fact that there was an acting Superintendent for four 
years was a source of frustration for the NBCUDIC board, who 
recorded in the minutes of the Corporation that the “continual 
monitoring of the system is in jeopardy.” There is now a full time 
Superintendent in place once again, however NBCUDIC still does 
not have the resources it needs to fulfill its responsibilities.

1.10	The Province needs to reexamine the purpose and structure of 
NBCUDIC.

Private Occupational 
Training Act

1.11	In chapter 3 we report on our audit in the Department of Post-
Secondary Education, Training and Labour of the Private 
Occupational Training Act. The Province provides certain 
protections to students attending registered private occupational 
training organizations under the Private Occupational Training Act. 
As of 31 March 2007, there were 70 registered private occupational 
training organizations in New Brunswick.

1.12	In the past ten years, there were eleven closures of 
occupational training organizations that required compensation to be 
paid.

1.13	In 2006-2007, there were 3,736 students protected under the 
Act for a total value of protected tuition of about $27.9 million.

1.14	We concluded that the Department of Post-Secondary 
Education, Training and Labour and the New Brunswick Private 
Occupational Training Corporation are providing financial protection 
for students. However, they are not fulfilling their stated mandate to 
provide effective consumer protection to students of private 
occupational training organizations in New Brunswick.

1.15	This audit was a challenge because we found that the stated 
mandate of the Private Occupational Training Branch was broader 
than the responsibilities specified in the legislation. The Department 
felt we should have audited their compliance with the legislation. 
However, we chose to audit against the stated mandate which was to 
regulate “the private occupational training industry in order to 
provide effective consumer protection for students and support a 
vibrant, healthy private training industry.”

1.16	We took the position that if that is what the Department says 
its mandate is, both in departmental annual reports and in brochures 
issued to students, then we wanted to audit against that 
mandate - specifically are they providing effective consumer 
protection.

1.17	The Department objected that this approach took us too far 
into the area of government policy.

1.18	This is not the first time we have found the mandate of a 
program to be overstated in government’s communications to the 
public. In our audit of the Pension Benefits Act that was included in 
volume 2 of our 2006 Report, we noted that the responsibilities of the 
Office of the Superintendent of Pensions had been overstated in the 
Department’s annual reports for many years until it was changed in 
2004-2005.

1.19	For the Private Occupational Training Act, we felt that 
effective consumer protection would mean that any programs not 
covered would be clearly specified by legislation or regulation, and 
that there would be clear reasons for those exemptions. This was not 
the case.

1.20	We feel that the Department needs to reassess the reasons for 
not providing protection to students of internet based training. While 
such training may be more difficult to regulate, it is a growing 
method of delivery. It is difficult to understand why students of 
traditional programs should be protected but not students of internet 
programs. We also believe that the Department’s interpretation that 
religious schools and flight schools are exempt from the Act may not 
be appropriate and needs to be clarified.

1.21	We found that the Department was taking steps to monitor the 
quality of programs registered under the Private Occupational 
Training Act. This is happening even though the Department is not 
mandated by legislation to monitor the quality of the programs. The 
Department needs to clarify its role and its communications about its 
quality of education activities, and improvements could be made to 
some of the monitoring activities it is currently doing.

1.22	Another area of public communication that was not consistent 
with legislation was in the Department’s description of the financial 
protection provided to students. In its public brochure, the 
implication is that tuition fees are 100% protected, whereas the Act 
says that this is only the case if there is sufficient money in the 
Training Completions Fund.

1.23	We also feel that there should be a formal contingency plan in 
place in case of a large closure that would deplete the Training 
Completions Fund. The fund currently has $1.8 million in place, and 
the fund has been sufficient to deal with all compensation requests to 
date. However, a contingency plan would ensure that should there 
ever be a crisis, the government would be able to react to it in a 
planned fashion rather than on an ad hoc basis. This is basic risk 
management.

1.24	The Department could put in place additional procedures to 
ensure that all private occupational training organizations are 
submitting the proper amount to the Training Completions Fund. The 
Department should also be able to earn a higher rate of return on the 
Fund balance than has been earned in recent years.

1.25	We did find that compensation to students after the closure of 
a training organization was being offered on a timely basis. This is 
critical to ensure that students have confidence in the protection they 
are offered.

1.26	We found that the registration fees charged for training 
programs and instructors were established in 1969 and not changed 
since. 

Wildlife Trust Fund

1.27	In chapter 4 we report on our audit of the Wildlife Trust Fund. 
In 2002, the Wildlife Trust Fund was established by Regulation under 
the Fish and Wildlife Act. The Regulation established a Wildlife 
Council consisting of seventeen members, representing a broad 
spectrum of wildlife conservation interests. 

1.28	In our audit of the Wildlife Trust Fund, we found that grants 
were being evaluated according to documented requirements of the 
Fund and that applications that did not meet the requirements were 
rejected. In fact we found ourselves in the unusual position of 
suggesting that the evaluation process may be too rigorous for 
smaller applications, although the Council has informed us that they 
intend to continue using one process for all applications.

1.29	We did recommend that the Council establish a written policy 
around what qualifies as a contribution from the applicant. The 
Wildlife Trust Fund will contribute a maximum of 75% of the cost of 
a project, and the applicant has to provide the rest. Since the 
applicant’s contribution is often in-kind, it is important for the 
Council to have a policy about what qualifies as an in-kind 
contribution.

1.30	The Fund does face a revenue risk however. Since over 85% 
of its revenue comes from conservation fees charged on the sale of 
hunting and fishing licenses, and since the number of those licenses 
sold each year is declining, the primary revenue source of the Fund is 
declining. The conservation fees declined almost 10% from 2002 
until 2006. For the Fund to be able to continue to support a 
significant number of projects, other revenue sources may have to be 
identified. Two possible additional revenue sources are penalty 
clauses in construction contracts and public donations.

Program evaluation in 
Health

1.31	In chapter 5 we report on our review of program evaluation in 
the Department of Health. In 2002 we conducted a series of scoping 
interviews in the Department. At the time many stakeholders 
indicated that there were deficiencies in the evaluation of programs 
in the Department. We wanted to assess the adequacy of the systems 
and practices that have been established to evaluate programs.

1.32	We sent program evaluation surveys to the Department of 
Health and to three Regional Health Authorities for seven programs 
administered by the Department. We received 27 completed surveys 
in response. We also sent an evaluation survey to the Department of 
Health for an eighth program, the Provincial Epidemiology Service, 
but we did not receive a response.

1.33	We found that the Department of Health has no formal 
documented evaluation plans in place for any of the seven programs 
we surveyed. There are, however, informal evaluative and 
performance monitoring processes in place for several of the 
programs. Also, in 2004, the Department disbanded its Evaluation 
Unit, greatly reducing the capacity of the Department in the area of 
program evaluation.

1.34	We also found that for most programs we surveyed, the 
program data that is captured and summarized is insufficient to allow 
for the ongoing evaluation of program success in achieving 
objectives. However, it is apparent from the comments we received 
that program decision-makers are generally responsive when 
presented with evidence indicating that their program needs changes 
or adjustments.

1.35	Our recommendations in this area dealt with setting 
evaluation guidelines and expectations, receiving regular evaluation 
reports and improving public reporting about the programs 
administered by the Department.

Prior years’ 
recommendations

1.36	In chapter 6 we report on our follow-up of prior years’ 
recommendations. We undertake our annual follow-up of our 
recommendations to determine if the changes we identified are being 
put in place. We do not have the resources to do extensive 
investigation into the extent of departmental implementation. We 
hope that the Public Accounts and Crown Corporations Committees 
will use our Reports, not just in the year of issue, but in subsequent 
years to hold departments and Crown corporations accountable for 
implementing the recommendations.

1.37	For the years 1999, 2000 and 2003, less than 50% of our 
recommendations were implemented even after four years. 2001 and 
2002 were better, however even those two years were below 75% 
implementation after four years. One trend that can be seen from our 
follow-up work is that line departments are diligent in trying to 
implement our recommendations, while central agencies have been 
less inclined to implement them over the past four years.

1.38	One area where progress has been slow was our 2003 audit of 
Crown agency governance. 15 of the 19 recommendations we made 
in 2003 still had not been implemented in 2007. However, we are 
encouraged by steps taken within the last year by the Executive 
Council Office to try to address these governance issues. 

1.39	We are also disappointed with the lack of progress made on 
our recommendations concerning tax expenditure programs where 
five of our six recommendations have not been implemented even 
after four years.

1.40	One finding that our follow-up work produced that was 
particularly concerning relates to our audit in the Department of 
Supply and Services on the Management of Insurable Risks to Public 
Works Buildings. During the original audit in 2003, the Department 
had identified $12 million of high priority capital maintenance needs 
but at the time the capital maintenance funding was less than $3 
million. This was despite the fact that the 1999 Grant Thornton report 
had identified underspending on necessary capital projects as a 
problem four years earlier. It seems that the situation has not 
improved. According to the Department of Supply and Services, the 
situation in 2007 is significantly worse. This problem was identified 
by Grant Thornton in 1999, brought up again by this Office in 2003 
and yet it continues to get worse.

1.41	The audits that we do are time consuming for Departments. 
They have to answer our questions and provide us with supporting 
documentation. However, in order that we can provide information to 
the Legislative Assembly on government programs, it is imperative 
that we receive co-operation. During this past year we encountered 
some delays receiving information from departments. Neither the 
Department of Agriculture, Fisheries and Aquaculture nor the 
Department of the Environment provided us with a response to our 
follow-up work in time to include it in this Report, and we had 
trouble getting feedback from the Department of Health on our audit 
of their program evaluation function.

Acknowledgements

1.42	I wish to acknowledge the hard work of the staff in the Office 
in completing this volume of our Report.

Michael Ferguson, CA

Auditor General