Audit of the management and delivery of procurement: chapter 3

Objectives, scope and methodology

Objectives

The objectives of this audit were to:

• determine if key elements of a management control framework support efficient procurement activities aligned with departmental operational needs; and
• provide assurance that ECCC's procurement transactions were in compliance with Government of Canada requirements and departmental and central agency policies and guidelines.

Scope

The scope included an examination of the following key elements supporting the procurement management control framework in place at the time of the audit:

• monitoring, reporting and oversight;
• roles and responsibilities;
• workload planning and priorities;
• service standards; and
• guidance.

The audit also included compliance testing of procurement transactions processed during fiscal year 2013-2014, as further detailed in the audit methodology section.

The audit did not include transactions related to petty cash, purchases on government acquisition cards or other purchases such as utilities, as these types of expenditures follow a separate process and may be considered in a planned Audit of Expenditure Management and Control.

Methodology

The audit was based on a combination of interviews, documentation review, data analysis and file examination for the testing of efficiency and compliance against TB Contracting Policy and ECCC's departmental guidance documents. The detailed methodology is provided in Annex 1.

A judgmental sample of 70 transactions was examined for compliance against key audit criteria. The sample covered the period from April 1, 2013, to March 31, 2014, and included transactions from the four branches in the table below, representing 70% of ECCC's total transactions and 73% of the total value. The testing of these transactions was carried out on site in the following regions: NCR, Ontario, Montreal and Edmonton.

While testing of the transactions focused on 2013-2014, the audit included other procedures, analysis and interviews with managers conducted until the end of the fieldwork in the fall of 2015. The audit did not identify any significant changes in procurement operations, processes or controls between 2013-14 and 2014-15, particularly as the Department was preparing for the 2015 SAP implementation.

The audit methodology also requires consideration of previous related work pertaining to procurement or contracting. Specifically, AEB, in collaboration with Deloitte, conducted a fraud risk assessment in 2015 with the objective of identifying potential scenarios where fraud could occur. The assessment reviewed a number of functional areas and scenarios, including the area of procurement and contracting. While the objective was not to uncover fraud, Deloitte provided a number of suggestions to improve procurement controls.

Observations made in the context of this audit are mostly consistent with the suggested improvements highlighted in the fraud risk assessment. However, AEB's recent follow-up on the status of the recommendations which ensued from that assessment^Footnote6 indicates that suggestions are being reviewed and considered by the Finance Branch.

Statement of conformance

This audit conforms to the Internal Auditing Standards for the Government of Canada as supported by the results of the quality assurance and improvement program.

In our professional judgement, sufficient and appropriate audit procedures have been conducted and evidence gathered to provide a high level of assurance on the accuracy of the conclusions reached and contained in this report. The conclusions relevant to the testing were based on a comparison of the situations as they existed at the end of the fieldwork in November 2015^Footnote7 against the audit criteria.